10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number 0-20914

OHIO VALLEY BANC CORP.

(Exact name of registrant as specified in its charter)

Ohio	31-1359191
(State of Incorporation)	(I.R.S. Employer Identification No.)

420 Third Avenue
Gallipolis, Ohio	45631
(Address of principal executive offices)	(ZIP Code)

(740) 446-2631

(Issuer's telephone number, including area code)

_____________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes☒   No☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes☒   No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes☐No☒

The number of common shares of the registrant outstanding as of August 9, 2016 was 4,142,247.

OHIO VALLEY BANC CORP.

Index

		Page Number
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Changes in Shareholders' Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to the Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
Signatures		40
Exhibit Index		41

2

PART I - FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

OHIO VALLEY BANC CORP.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share and per share data)

	June 30, 2016			December 31, 2015
	UNAUDITED
ASSETS
Cash and noninterest-bearing deposits with banks	$	9,965		$	9,475
Interest-bearing deposits with banks		47,502			36,055
Total cash and cash equivalents		57,467			45,530
Certificates of deposit in financial institutions		1,715			1,715
Securities available for sale		94,406			91,651
Securities held to maturity (estimated fair value: 2016 - $20,491; 2015 - $20,790)		19,310			19,903
Federal Home Loan Bank and Federal Reserve Bank stock		6,576			6,576
Total loans		602,936			585,752
Less: Allowance for loan losses		(6,934	)		(6,648	)
Net loans		596,002			579,104
Premises and equipment, net		10,348			10,404
Other real estate owned		2,046			2,358
Accrued interest receivable		1,853			1,819
Goodwill		1,267			1,267
Bank owned life insurance and annuity assets		28,752			28,352
Other assets		6,707			7,606
Total assets	$	826,449		$	796,285
LIABILITIES
Noninterest-bearing deposits	$	184,359		$	176,499
Interest-bearing deposits		493,956			484,247
Total deposits		678,315			660,746
Other borrowed funds		31,411			23,946
Subordinated debentures		8,500			8,500
Accrued liabilities		13,427			12,623
Total liabilities		731,653			705,815
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 5)		----			----
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized;   2016 - 4,801,986 shares issued; 2015 - 4,777,414 shares issued)		4,802			4,777
Additional paid-in capital		35,867			35,318
Retained earnings		68,585			65,782
Accumulated other comprehensive income		1,254			305
Treasury stock, at cost (659,739 shares)		(15,712	)		(15,712	)
Total shareholders' equity		94,796			90,470
Total liabilities and shareholders' equity	$	826,449		$	796,285

See accompanying notes to consolidated financial statements

3

OHIO VALLEY BANC CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(dollars in thousands, except per share data)

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Interest and dividend income:
Loans, including fees	$	8,135	$	8,150	$	17,062	$	17,049
Securities
Taxable		491		453		979		902
Tax exempt		112		134		226		273
Dividends		73		72		147		146
Other Interest		102		57		269		123
		8,913		8,866		18,683		18,493
Interest expense:
Deposits		510		555		1,008		1,090
Other borrowed funds		147		120		272		241
Subordinated debentures		50		42		97		83
		707		717		1,377		1,414
Net interest income		8,206		8,149		17,306		17,079
Provision for loan losses		141		799		620		721
Net interest income after provision for loan losses		8,065		7,350		16,686		16,358
Noninterest income:
Service charges on deposit accounts		434		393		839		746
Trust fees		56		57		116		115
Income from bank owned life insurance and annuity assets		191		138		400		314
Mortgage banking income		61		55		118		114
Electronic refund check / deposit fees		270		255		2,024		2,350
Debit / credit card interchange income		625		627		1,211		1,165
Gain (loss) on other real estate owned		13		45		8		60
Gain on sale of securities		----		135		----		135
Other		211		212		380		407
		1,861		1,917		5,096		5,406
Noninterest expense:
Salaries and employee benefits		4,528		4,426		9,098		8,826
Occupancy		405		388		834		790
Furniture and equipment		201		194		386		372
Professional fees		341		353		678		709
Marketing expense		248		234		495		469
FDIC insurance		148		132		297		298
Data processing		336		362		689		730
Software		302		262		594		509
Foreclosed assets		121		62		186		97
Merger related expenses		134		----		361		----
Other		1,009		1,141		2,124		2,181
		7,773		7,554		15,742		14,981
Income before income taxes		2,153		1,713		6,040		6,783
Provision for income taxes		447		303		1,502		1,749
NET INCOME	$	1,706	$	1,410	$	4,538	$	5,034
Earnings per share	$	.41	$	.34	$	1.10	$	1.22

See accompanying notes to consolidated financial statements

4

OHIO VALLEY BANC CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (dollars in thousands)
	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Net Income	$	1,706		$	1,410		$	4,538		$	5,034
Other comprehensive income:
Change in unrealized gain on available for sale securities		499			(971	)		1,437			(516	)
Reclassification adjustment for realized (gains)		----			(135	)		----			(135	)
		499			(1,106	)		1,437			(651	)
Related tax (expense) benefit		(170	)		376			(489	)		222
Total other comprehensive income, net of tax		329			(730	)		948			(429	)
Total comprehensive income	$	2,035		$	680		$	5,486		$	4,605

See accompanying notes to consolidated financial statements

5

OHIO VALLEY BANC CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGESIN SHAREHOLDERS' EQUITY (UNAUDITED) (dollars in thousands, except share and per share data)
	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Balance at beginning of period	$	93,631		$	89,276		$	90,470		$	86,216
Net income		1,706			1,410			4,538			5,034
Other comprehensive income, net of tax		329			(730	)		948			(429	)
Common stock issued to ESOP, 24,572 shares		----			----			575			----
Cash dividends		(870	)		(1,071	)		(1,735	)		(1,936	)
Balance at end of period	$	94,796		$	88,885		$	94,796		$	88,885
Cash dividends per share	$	.21		$	.26		$	.42		$	.47

See accompanying notes to consolidated financial statements

6

OHIO VALLEY BANC CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (dollars in thousands)
	Six months ended June 30,
	2016			2015
Net cash provided by operating activities:	$	7,176		$	4,760
Investing activities:
Proceeds from maturities of securities available for sale		8,805			7,783
Purchases of securities available for sale		(10,278	)		(17,035	)
Proceeds from maturities of securities held to maturity		981			1,501
Purchases of securities held to maturity		(412	)		(625	)
Proceeds from sale of available for sale securities		----			8,792
Net change in loans		(17,583	)		(234	)
Proceeds from sale of other real estate owned		386			487
Purchases of premises and equipment		(438	)		(1,198	)
Net cash (used in) investing activities		(18,539	)		(529	)
Financing activities:
Change in deposits		17,569			19,458
Cash dividends		(1,735	)		(1,936	)
Proceeds from Federal Home Loan Bank borrowings		8,203			----
Repayment of Federal Home Loan Bank borrowings		(715	)		(650	)
Change in other short-term borrowings		(22	)		----
Net cash provided by financing activities		23,300			16,872
Change in cash and cash equivalents		11,937			21,103
Cash and cash equivalents at beginning of period		45,530			30,977
Cash and cash equivalents at end of period	$	57,467		$	52,080
Supplemental disclosure:
Cash paid for interest	$	1,330		$	1,352
Cash paid for income taxes		1,675			2,450
Transfers from loans to other real estate owned		65			492
Other real estate owned sales financed by the Bank		274			135

See accompanying notes to consolidated financial statements

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION:  The accompanying consolidated financial statements include the accounts of Ohio Valley Banc Corp. ("Ohio Valley") and its wholly-owned subsidiaries, The Ohio Valley Bank Company (the "Bank"), Loan Central, Inc. ("Loan Central"), a consumer finance company, Ohio Valley Financial Services Agency, LLC ("Ohio Valley Financial Services"), an insurance agency, and OVBC Captive, Inc. ("the Captive"), a limited purpose property and casualty insurance company.  Ohio Valley and its subsidiaries are collectively referred to as the "Company".  All material intercompany accounts and transactions have been eliminated in consolidation.

These interim financial statements are prepared by the Company without audit and reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the consolidated financial position of the Company at June 30, 2016, and its results of operations and cash flows for the periods presented.  The results of operations for the six months ended June 30, 2016 are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2016.  The accompanying consolidated financial statements do not purport to contain all the necessary financial disclosures required by U.S. generally accepted accounting principles ("US GAAP") that might otherwise be necessary in the circumstances.  The Annual Report of the Company for the year ended December 31, 2015 contains consolidated financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.

The consolidated financial statements for 2015 have been reclassified to conform to the presentation for 2016.  These reclassifications had no effect on the net results of operations or shareholders' equity.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:  The accounting and reporting policies followed by the Company conform to US GAAP established by the Financial Accounting Standards Board ("FASB"). The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements.  Actual results could differ from those estimates.  Areas involving the use of management's estimates and assumptions that are more susceptible to change in the near term involve the allowance for loan losses, mortgage servicing rights, deferred tax assets, the fair value of certain securities, the fair value of financial instruments and the determination and carrying value of impaired loans and other real estate owned.

INDUSTRY SEGMENT INFORMATION:  Internal financial information is primarily reported and aggregated in two lines of business, banking and consumer finance.

EARNINGS PER SHARE:  Earnings per share are computed based on net income divided by the weighted average number of common shares outstanding during the period.  The weighted average common shares outstanding were 4,134,956 for the six months ended June 30, 2016 and 4,117,675 for the six months ended June 30, 2015.  Ohio Valley had no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.

NEW ACCOUNTING PRONOUNCEMENTS:  In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)". The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2018, with early adoption permitted on January 1, 2017. Management is currently evaluating the impact of the adoption of this guidance on the Company's financial statements.

In January 2016, the FASB issued ASU No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities".  The update provides updated accounting and reporting requirements for both public and non-public entities.  The most significant provisions that will impact the Company are: 1) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement; 2) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet; 3) utilization of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and 4) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements.  The update will be effective for interim and annual periods beginning after December 15, 2017, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption.  Early adoption is not permitted.  Management is currently evaluating the impact of this update on its Consolidated Financial Statements.

8

In February 2016, the FASB issued an update (ASU 2016-02, Leases) which will require lessees to record most leases on their balance sheet and recognize leasing expenses in the income statement. Operating leases, except for short-term leases that are subject to an accounting policy election, will be recorded on the balance sheet for lessees by establishing a lease liability and corresponding right-of-use asset. The guidance in this ASU will become effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. Management is currently evaluating the impact of this update on its Consolidated Financial Statements.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses". ASU 2016-13 requires entities to report "expected" credit losses on financial instruments and other commitments to extend credit rather than the current "incurred loss" model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity's portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, for annual periods and interim periods within those annual periods, beginning after December 15, 2018.  Management is currently evaluating the impact this update will have on the Company's financial statements and results of operations.

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following is a description of the Company's valuation methodologies used to measure and disclose the fair values of its financial assets and liabilities on a recurring or nonrecurring basis:

Securities:  The fair values for securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

Impaired Loans:  At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower's financial statements, or aging reports, adjusted or discounted based on management's historical knowledge, changes in market conditions from the time of the valuation, and management's expertise and knowledge of the client and client's business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

9

Other Real Estate Owned:  Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. 

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of management reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with management's own assumptions of fair value based on factors that include recent market data or industry-wide statistics. On an as-needed basis, the Company reviews the fair value of collateral, taking into consideration current market data, as well as all selling costs that typically approximate 10%.

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements at June 30, 2016 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government sponsored entity securities		----	$	8,025		----
Agency mortgage-backed securities, residential		----		86,381		----

	Fair Value Measurements at December 31, 2015 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Assets:
U.S. Government sponsored entity securities		----	$	8,965		----
Agency mortgage-backed securities, residential		----		82,686		----

There were no transfers between Level 1 and Level 2 during 2016 or 2015.

10

Assets and Liabilities Measured on a Nonrecurring Basis

Assets and liabilities measured at fair value on a nonrecurring basis are summarized below:

	Fair Value Measurements at June 30, 2016, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Assets:
Impaired loans:
Commercial real estate:
Owner-occupied		----		----	$	3,318
Nonowner-occupied		----		----		2,148
Commercial and industrial		----		----		307
Other real estate owned:
Commercial real estate:
Construction		----		----		1,147

	Fair Value Measurements at December 31, 2015, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Assets:
Impaired loans:
Commercial real estate:
Nonowner-occupied		----		----	$	2,473
Commercial and industrial		----		----		3,779
Other real estate owned:
Commercial real estate:
Construction		----		----		1,147

At June 30, 2016, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled $7,835, with a corresponding valuation allowance of $2,062, resulting in an increase of $1,574 in provision expense during the three months ended June 30, 2016, and an increase of $1,658 during the six months ended June 30, 2016, with no additional charge-offs recognized.  This is compared to a decrease of $19 in provision expense during the three months ended June 30, 2015, and a decrease of $13 in provision expense during the six months ended June 30, 2015, with $1,304 in additional charge-offs recognized.  At December 31, 2015, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled $7,811, with a corresponding valuation allowance of $1,559, resulting in an increase of $741 in provision expense during the year ended December 31, 2015, with $1,422 in additional charge-offs recognized.

Other real estate owned that was measured at fair value less costs to sell at June 30, 2016 and December 31, 2015 had a net carrying amount of $1,147, which is made up of the outstanding balance of $2,217, net of a valuation allowance of $1,070 at December 31, 2015. There were no corresponding write downs during the three and six months ended June 30, 2016 and 2015.

11

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2016 and December 31, 2015:

June 30, 2016	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range	(Weighted  Average)
Impaired loans:
Commercial real estate:
Owner-occupied	$	3,318	Sales approach	Adjustment to comparables	5% to 26%		9.7%
			Cost approach	Adjustment to comparables	0% to 29.5%		14.76%
Nonowner-occupied		2,148	Sales approach	Adjustment to comparables	0% to 12.5%		6.9%
Commercial and industrial		307	Sales approach	Adjustment to comparables	0.9% to 9.7%		5.2%
Other real estate owned:
Commercial real estate:
Construction		1,147	Sales approach	Adjustment to comparables	0% to 35%		15.2%

December 31, 2015	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range	(Weighted Average)
Impaired loans:
Commercial real estate:
Nonowner-occupied	$	2,473	Sales approach	Adjustment to comparables	0% to 12.5%		5.7%
Commercial and industrial		3,779	Sales approach	Adjustment to comparables	0.9% to 30%		14.3%
Other real estate owned:
Commercial real estate:
Construction		1,147	Sales approach	Adjustment to comparables	0% to 35%		15.2%

The carrying amounts and estimated fair values of financial instruments at June 30, 2016 and December 31, 2015 are as follows:

			Fair Value Measurements at June 30, 2016 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	57,467	$	57,467	$	----	$	----	$	57,467
Certificates of deposit in financial institutions		1,715		----		1,715		----		1,715
Securities available for sale		94,406		----		94,406		----		94,406
Securities held to maturity		19,310		----		9,851		10,640		20,491
Federal Home Loan Bank and Federal Reserve Bank stock		6,576		N/A		N/A		N/A		N/A
Loans, net		596,002		----		----		601,895		601,895
Accrued interest receivable		1,853		----		218		1,635		1,853
Financial liabilities:
Deposits		678,315		184,359		494,500		----		678,859
Other borrowed funds		31,411		----		31,621		----		31,621
Subordinated debentures		8,500		----		5,563		----		5,563
Accrued interest payable		496		3		493		----		496

12

			Fair Value Measurements at December 31, 2015 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	45,530	$	45,530	$	----	$	----	$	45,530
Certificates of deposit in financial institutions		1,715		----		1,715		----		1,715
Securities available for sale		91,651		----		91,651		----		91,651
Securities held to maturity		19,903		----		9,814		10,976		20,790
Federal Home Loan Bank and Federal Reserve Bank stock		6,576		N/A		N/A		N/A		N/A
Loans, net		579,104		----		----		582,427		582,427
Accrued interest receivable		1,819		----		224		1,595		1,819
Financial liabilities:
Deposits		660,746		176,499		484,636		----		661,135
Other borrowed funds		23,946		----		23,672		----		23,672
Subordinated debentures		8,500		----		5,368		----		5,368
Accrued interest payable		449		4		445		----		449

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

Cash and Cash Equivalents: The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

Certificates of Deposit in Financial Institutions: The carrying amounts of certificates of deposit in financial institutions approximate fair values and are classified as Level 2.

Securities Held to Maturity:  The fair values for securities held to maturity are determined in the same manner as securities held for sale and discussed earlier in this note.  Level 3 securities consist of nonrated municipal bonds and tax credit ("QZAB") bonds.

Federal Home Loan Bank and Federal Reserve Bank stock: It is not practical to determine the fair value of both Federal Home Loan Bank and Federal Reserve Bank stock due to restrictions placed on its transferability.

Loans: Fair values of loans are estimated as follows:  The fair value of fixed rate loans is estimated by discounting future cash flows using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Deposit Liabilities: The fair values disclosed for noninterest-bearing deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date resulting in a Level 2 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Other Borrowed Funds: The carrying values of the Company's short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification. The fair values of the Company's long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Subordinated Debentures: The fair values of the Company's Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Accrued Interest Receivable and Payable: The carrying amount of accrued interest approximates fair value, resulting in a classification that is consistent with the earning assets and interest-bearing liabilities with which it is associated.

13

Off-balance Sheet Instruments:  Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The fair value of commitments is not material.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

NOTE 3 – SECURITIES

The following table summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at June 30, 2016 and December 31, 2015 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses:

Securities Available for Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2016
U.S. Government sponsored entity securities	$	8,007	$	18	$	----		$	8,025
Agency mortgage-backed securities, residential		84,498		1,883		----			86,381
Total securities	$	92,505	$	1,901	$	----		$	94,406
December 31, 2015
U.S. Government sponsored entity securities	$	9,011	$	----	$	(46	)	$	8,965
Agency mortgage-backed securities, residential		82,178		981		(473	)		82,686
Total securities	$	91,189	$	981	$	(519	)	$	91,651

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized  Losses			Estimated Fair Value
June 30, 2016
Obligations of states and political subdivisions	$	19,305	$	1,181	$	----		$	20,486
Agency mortgage-backed securities, residential		5		----		----			5
Total securities	$	19,310	$	1,181	$	----		$	20,491
December 31, 2015
Obligations of states and political subdivisions	$	19,898	$	892	$	(5	)	$	20,785
Agency mortgage-backed securities, residential		5		----		----			5
Total securities	$	19,903	$	892	$	(5	)	$	20,790

The amortized cost and estimated fair value of debt securities at June 30, 2016, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay the debt obligations prior to their contractual maturities.  Securities not due at a single maturity are shown separately.

	Available for Sale				Held to Maturity
Debt Securities:	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	4,002	$	4,007	$	141	$	144
Due in over one to five years		4,005		4,018		6,266		6,623
Due in over five to ten years		----		----		10,817		11,597
Due after ten years		----		----		2,081		2,122
Agency mortgage-backed securities, residential		84,498		86,381		5		5
Total debt securities	$	92,505	$	94,406	$	19,310	$	20,491

14

The following table summarizes securities with unrealized losses at June 30, 2016 and December 31, 2015, aggregated by major security type and length of time in a continuous unrealized loss position:

Less Than 12 Months

12 Months or More

Total

June 30, 2016

Fair Value

Unrealized Loss

Fair Value

Unrealized Loss

Fair Value

Unrealized Loss

Securities Available for Sale

U.S. Government sponsored

entity securities

$

----

$

----

$

----

$

----

$

----

$

----

Agency mortgage-backed

securities, residential

----

----

----

----

----

----

Total available for sale

$

----

$

----

$

----

$

----

$

----

$

----

	Less Than 12 Months					12 Months or More					Total
December 31, 2015	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Government sponsored
entity securities	$	7,964	$	(46	)	$	----	$	----		$	7,964	$	(46	)
Agency mortgage-backed
securities, residential		42,112		(407	)		3,645		(66	)		45,757		(473	)
Total available for sale	$	50,076	$	(453	)	$	3,645	$	(66	)	$	53,721	$	(519	)

	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrecognized Loss			Fair Value		Unrecognized Loss		Fair Value		Unrecognized Loss
Securities Held to Maturity
Obligations of states and
political subdivisions	$	995	$	(5	)	$	----	$	----	$	995	$	(5	)
Total available for sale	$	995	$	(5	)	$	----	$	----	$	995	$	(5	)

There were no sales of investment securities during the three and six months ended June 30, 2016.  During the three and six months ended June 30, 2015 the Company had proceeds of $8,792 pertaining to securities sales on available for sale securities with gross gains recognized of $135 for both periods. Unrealized losses on the Company's debt securities have not been recognized into income because the issuers' securities are of high credit quality as of June 30, 2016, and management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery.  Management does not believe any individual unrealized loss at June 30, 2016 and December 31, 2015 represents an other-than-temporary impairment.

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are comprised of the following:	June 30,		December 31,
	2016		2015
Residential real estate	$	225,731	$	223,875
Commercial real estate:
Owner-occupied		70,478		73,458
Nonowner-occupied		83,659		72,002
Construction		30,099		23,852
Commercial and industrial		83,365		81,936
Consumer:
Automobile		46,239		44,566
Home equity		19,712		20,841
Other		43,653		45,222
		602,936		585,752
Less:  Allowance for loan losses		6,934		6,648
Loans, net	$	596,002	$	579,104

15

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended June 30, 2016 and 2015:

June 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,185		$	1,995		$	2,672		$	1,094		$	6,946
Provision for loan losses		(258	)		1,445			(1,266	)		220			141
Loans charged off		(67	)		(52	)		----			(353	)		(472	)
Recoveries		46			76			10			187			319
Total ending allowance balance	$	906		$	3,464		$	1,416		$	1,148		$	6,934

June 30, 2015	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,465		$	4,210		$	1,738		$	907		$	8,320
Provision for loan losses		(121	)		(64	)		478			506			799
Loans charged-off		(126	)		(1,366	)		(22	)		(446	)		(1,960	)
Recoveries		12			15			93			165			285
Total ending allowance balance	$	1,230		$	2,795		$	2,287		$	1,132		$	7,444

The following table presents the activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2016 and 2015:

June 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,087		$	1,959		$	2,589		$	1,013		$	6,648
Provision for loan losses		(218	)		1,462			(1,184	)		560			620
Loans charged off		(171	)		(52	)		----			(836	)		(1,059	)
Recoveries		208			95			11			411			725
Total ending allowance balance	$	906		$	3,464		$	1,416		$	1,148		$	6,934

June 30, 2015	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,426		$	4,195		$	1,602		$	1,111		$	8,334
Provision for loan losses		(90	)		(58	)		492			377			721
Loans charged-off		(223	)		(1,374	)		(24	)		(707	)		(2,328	)
Recoveries		117			32			217			351			717
Total ending allowance balance	$	1,230		$	2,795		$	2,287		$	1,132		$	7,444

The following table presents the balance in the allowance for loan losses and the recorded investment of loans by portfolio segment and based on impairment method as of June 30, 2016 and December 31, 2015:

June 30, 2016	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	----	$	1,893	$	735	$	2	$	2,630
Collectively evaluated for impairment		906		1,571		681		1,146		4,304
Total ending allowance balance	$	906	$	3,464	$	1,416	$	1,148	$	6,934
Loans:
Loans individually evaluated for impairment	$	726	$	11,914	$	9,329	$	218	$	22,187
Loans collectively evaluated for impairment		225,005		172,322		74,036		109,386		580,749
Total ending loans balance	$	225,731	$	184,236	$	83,365	$	109,604	$	602,936

16

December 31, 2015	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	----	$	311	$	1,850	$	3	$	2,164
Collectively evaluated for impairment		1,087		1,648		739		1,010		4,484
Total ending allowance balance	$	1,087	$	1,959	$	2,589	$	1,013	$	6,648
Loans:
Loans individually evaluated for impairment	$	1,001	$	7,318	$	8,691	$	218	$	17,228
Loans collectively evaluated for impairment		222,874		161,994		73,245		110,411		568,524
Total ending loans balance	$	223,875	$	169,312	$	81,936	$	110,629	$	585,752

The following tables present information related to loans individually evaluated for impairment by class of loans as of June 30, 2016 and December 31, 2015:

June 30, 2016	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	4,936	$	4,936	$	1,789
Nonowner-occupied		390		390		104
Commercial and industrial		887		887		735
Consumer:
Home equity		218		218		2
With no related allowance recorded:
Residential real estate		726		726		----
Commercial real estate:
Owner-occupied		3,691		3,144		----
Nonowner-occupied		5,659		3,262		----
Construction		280		182		----
Commercial and industrial		8,442		8,442		----
Total	$	25,229	$	22,187	$	2,630

December 31, 2015	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	204	$	204	$	204
Nonowner-occupied		396		396		107
Commercial and industrial		4,355		4,355		1,850
Consumer:
Home equity		218		218		3
With no related allowance recorded:
Residential real estate		1,001		1,001		----
Commercial real estate:
Owner-occupied		3,812		3,265		----
Nonowner-occupied		5,178		2,773		----
Construction		680		680		----
Commercial and industrial		4,336		4,336		----
Total	$	20,180	$	17,228	$	2,164

17

The following tables present information related to loans individually evaluated for impairment by class of loans for the three and six months ended June 30, 2016 and 2015:

	Three months ended June 30, 2016						Six months ended June 30, 2016
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	2,570	$	143	$	143	$	1,781	$	147	$	147
Nonowner-occupied		392		5		5		393		10		10
Commercial and industrial		887		----		----		887		----		----
Consumer:
Home equity		218		2		2		218		4		4
With no related allowance recorded:
Residential real estate		728		7		7		730		16		16
Commercial real estate:
Owner-occupied		3,197		40		40		3,220		83		83
Nonowner-occupied		3,378		29		29		3,176		42		42
Construction		431		97		97		514		97		97
Commercial and industrial		8,212		95		95		8,076		187		187
Total	$	20,013	$	418	$	418	$	18,995	$	586	$	586

	Three months ended June 30, 2015						Six months ended June 30, 2015
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	478	$	----	$	----	$	711	$	----	$	----
Nonowner-occupied		3,575		49		49		3,598		65		65
Commercial and industrial		3,185		40		40		2,909		65		65
Consumer:
Home equity		218		2		2		219		4		4
With no related allowance recorded:
Residential real estate		1,656		16		16		1,575		25		25
Commercial real estate:
Owner-occupied		2,570		30		30		2,573		60		60
Nonowner-occupied		3,630		13		13		3,857		25		25
Construction		680		----		----		453		----		----
Commercial and industrial		4,249		51		51		4,322		107		107
Total	$	20,241	$	201	$	201	$	20,217	$	351	$	351

The recorded investment of a loan is its carrying value excluding accrued interest and deferred loan fees.

Nonaccrual loans and loans past due 90 days or more and still accruing include both smaller balance homogenous loans that are collectively evaluated for impairment and individually classified as impaired loans.

The Company transfers loans to other real estate owned, at fair value less cost to sell, in the period the Company obtains physical possession of the property (through legal title or through a deed in lieu). As of June 30, 2016 and December 31, 2015, other real estate owned secured by residential real estate totaled $818 and $1,131, respectively. In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $1,099 and $988 as of June 30, 2016 and December 31, 2015, respectively.

18

The following table presents the recorded investment of nonaccrual loans and loans past due 90 days or more and still accruing by class of loans as of June 30, 2016 and December 31, 2015:

June 30, 2016	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	142	$	2,185
Commercial real estate:
Owner-occupied		135		394
Nonowner-occupied		----		2,402
Construction		----		182
Commercial and industrial		75		1,200
Consumer:
Automobile		56		16
Home equity		----		32
Other		46		----
Total	$	454	$	6,411

December 31, 2015	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	20	$	2,048
Commercial real estate:
Owner-occupied		----		404
Nonowner-occupied		----		2,737
Construction		----		769
Commercial and industrial		----		1,152
Consumer:
Automobile		18		27
Home equity		----		96
Other		1		3
Total	$	39	$	7,236

The following table presents the aging of the recorded investment of past due loans by class of loans as of June 30, 2016 and December 31, 2015:

June 30, 2016	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	3,477	$	1,319	$	1,742	$	6,538	$	219,193	$	225,731
Commercial real estate:
Owner-occupied		348		1,305		396		2,049		68,429		70,478
Nonowner-occupied		34		48		2,402		2,484		81,175		83,659
Construction		355		----		182		537		29,562		30,099
Commercial and industrial		115		25		1,221		1,361		82,004		83,365
Consumer:
Automobile		789		152		68		1,009		45,230		46,239
Home equity		74		70		16		160		19,552		19,712
Other		568		264		46		878		42,775		43,653
Total	$	5,760	$	3,183	$	6,073	$	15,016	$	587,920	$	602,936

19

December 31, 2015	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	2,564	$	1,484	$	1,708	$	5,756	$	218,119	$	223,875
Commercial real estate:
Owner-occupied		141		33		371		545		72,913		73,458
Nonowner-occupied		35		334		2,737		3,106		68,896		72,002
Construction		----		2		769		771		23,081		23,852
Commercial and industrial		31		88		1,077		1,196		80,740		81,936
Consumer:
Automobile		727		197		36		960		43,606		44,566
Home equity		75		----		76		151		20,690		20,841
Other		420		104		4		528		44,694		45,222
Total	$	3,993	$	2,242	$	6,778	$	13,013	$	572,739	$	585,752

Troubled Debt Restructurings:

A troubled debt restructuring ("TDR") occurs when the Company has agreed to a loan modification in the form of a concession for a borrower who is experiencing financial difficulty.  All TDR's are considered to be impaired.   The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a reduction in the contractual principal and interest payments of the loan; or short-term interest-only payment terms.

The Company has allocated reserves for a portion of its TDR's to reflect the fair values of the underlying collateral or the present value of the concessionary terms granted to the customer.

The following table presents the types of TDR loan modifications by class of loans as of June 30, 2016 and December 31, 2015:

June 30, 2016	TDR's Performing to Modified Terms		TDR's Not Performing to Modified Terms		Total TDR's
Residential real estate
Interest only payments	$	726	$	----	$	726
Commercial real estate:
Owner-occupied
Interest only payments		389		----		389
Rate reduction		----		232		232
Reduction of principal and interest payments		592		----		592
Maturity extension at lower stated rate than market rate		1,932		----		1,932
Credit extension at lower stated rate than market rate		204		----		204
Nonowner-occupied
Interest only payments		539		2,148		2,687
Rate reduction		390		----		390
Credit extension at lower stated rate than market rate		575		----		575
Commercial and industrial
Interest only payments		7,462		----		7,462
Credit extension at lower stated rate than market rate		980		391		1,371
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		218		----		218
Total TDR's	$	14,007	$	2,771	$	16,778

20

December 31, 2015	TDR's Performing to Modified Terms		TDR's Not Performing to Modified Terms		Total TDR's
Residential real estate
Interest only payments	$	1,001	$	----	$	1,001
Commercial real estate:
Owner-occupied
Interest only payments		433		----		433
Rate reduction		----		232		232
Reduction of principal and interest payments		604		----		604
Maturity extension at lower stated rate than market rate		1,996		----		1,996
Credit extension at lower stated rate than market rate		204		----		204
Nonowner-occupied
Interest only payments		300		2,473		2,773
Rate reduction		396		----		396
Commercial and industrial
Interest only payments		7,579		----		7,579
Credit extension at lower stated rate than market rate		226		391		617
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		218		----		218
Total TDR's	$	12,957	$	3,096	$	16,053

During the three and six months ended June 30, 2016, the TDR's described above decreased the provision expense and the allowance for loan losses by $1,167 and$1,119, respectively, with no corresponding charge-offs.  This is compared to a $47 decrease and a $68 increase in the provision expense and the allowance for loan losses during the three and six months ended June 30, 2015, respectively, with a corresponding charge-off of $1,304.  During the year ended December 31, 2015, the TDR's described above increased the allowance for loan losses and provision expense by $93 with corresponding charge-offs of $1,422.  The charge-offs of $1,422 during 2015 included $1,304 that were related to specific reserves that had already been provided for during 2014, and, as a result, did not impact provision expense during 2015.

At June 30, 2016, the balance in TDR loans increased $725, or 4.5%, from year-end 2015.  The increase was largely due to concessions granted on two commercial real estate nonowner-occupied loans during the first quarter of 2016.  The Company had 83% of its TDR's performing according to their modified terms at June 30, 2016, as compared to 81% at December 31, 2015.  The Company's specific allocations in reserves to customers whose loan terms have been modified in TDR's totaled $550 at June 30, 2016, as compared to $1,669 in reserves at December 31, 2015.  At June 30, 2016, the Company had $864 in commitments to lend additional amounts to customers with outstanding loans that are classified as TDR's, as compared to $995 at December 31, 2015.

There were no TDR loan modifications during the three months ended June 30, 2016.  The following table presents the pre- and post-modification balances of TDR loan modifications by class of loans that occurred during the three months ended June 30, 2015:

	TDR's Performing to Modified Terms				TDR's Not Performing to Modified Terms
Three months ended June 30, 2015	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Residential real estate:
Interest only payments	$	495	$	495	$	----	$	----
Total TDR's	$	495	$	495	$	----	$	----

21

The following table presents the pre- and post-modification balances of TDR loan modifications by class of loans that occurred during the six months ended June 30, 2016 and 2015:

	TDR's Performing to Modified Terms				TDR's Not Performing to Modified Terms
Six months ended June 30, 2016	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Commercial real estate:
Nonowner-occupied
Interest only payments	$	238	$	238	$	----	$	----
Credit extension at lower stated rate than market rate		575		575		----		----
Total TDR's	$	813	$	813	$	----	$	----

	TDR's Performing to Modified Terms				TDR's Not Performing to Modified Terms
Six months ended June 30, 2015	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Residential real estate:
Interest only payments	$	495	$	495	$	----	$	----
Total TDR's	$	495	$	495	$	----	$	----

All of the Company's loans that were restructured during the six months ended June 30, 2016 and 2015 were performing in accordance with their modified terms.  Furthermore, there were no TDR's described above at June 30, 2016 and 2015 that experienced any payment defaults within twelve months following their loan modification.  A default is considered to have occurred once the TDR is past due 90 days or more or it has been placed on nonaccrual.  TDR loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.  The loans modified during the six months ended June 30, 2016 had no impact on the provision expense or the allowance for loan losses.  As of June 30, 2016, the Company had no allocation of reserves to customers whose loan terms were modified during the first six months of 2016. The loans modified during the six months ended June 30, 2015 had no impact on the provision expense or the allowance for loan losses.  As of June 30, 2015, the Company had no allocation of reserves to customers whose loan terms were modified during the first six months of 2015.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. These risk categories are represented by a loan grading scale from 1 through 10. The Company analyzes loans individually with a higher credit risk rating and groups these loans into categories called "criticized" and "classified" assets. The Company considers its criticized assets to be loans that are graded 8 and its classified assets to be loans that are graded 9 through 10. The Company's risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed $500.

The Company uses the following definitions for its criticized loan risk ratings:

Special Mention (Loan Grade 8).Loans classified as special mention indicate considerable risk due to deterioration of repayment (in the earliest stages) due to potential weak primary repayment source, or payment delinquency.  These loans will be under constant supervision, are not classified and do not expose the institution to sufficient risks to warrant classification.  These deficiencies should be correctable within the normal course of business, although significant changes in company structure or policy may be necessary to correct the deficiencies.  These loans are considered bankable assets with no apparent loss of principal or interest envisioned.  The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted.  Credits that are defined as a troubled debt restructuring should be graded no higher than special mention until they have been reported as performing over one year after restructuring.

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The Company uses the following definitions for its classified loan risk ratings:

Substandard (Loan Grade 9).  Loans classified as substandard represent very high risk, serious delinquency, nonaccrual, or unacceptable credit. Repayment through the primary source of repayment is in jeopardy due to the existence of one or more well defined weaknesses and the collateral pledged may inadequately protect collection of the loans. Loss of principal is not likely if weaknesses are corrected, although financial statements normally reveal significant weakness. Loans are still considered collectible, although loss of principal is more likely than with special mention loan grade 8 loans. Collateral liquidation considered likely to satisfy debt.

Doubtful (Loan Grade 10).  Loans classified as doubtful display a high probability of loss, although the amount of actual loss at the time of classification is undetermined. This should be a temporary category until such time that actual loss can be identified, or improvements made to reduce the seriousness of the classification. These loans exhibit all substandard characteristics with the addition that weaknesses make collection or liquidation in full highly questionable and improbable. This classification consists of loans where the possibility of loss is high after collateral liquidation based upon existing facts, market conditions, and value. Loss is deferred until certain important and reasonable specific pending factors which may strengthen the credit can be more accurately determined. These factors may include proposed acquisitions, liquidation procedures, capital injection, receipt of additional collateral, mergers, or refinancing plans. A doubtful classification for an entire credit should be avoided when collection of a specific portion appears highly probable with the adequately secured portion graded substandard.

Criticized and classified loans will mostly consist of commercial and industrial and commercial real estate loans. The Company considers its loans that do not meet the criteria for a criticized and classified asset rating as pass rated loans, which will include loans graded from 1 (Prime) to 7 (Watch). All commercial loans are categorized into a risk category either at the time of origination or reevaluation date. As of June 30, 2016 and December 31, 2015, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

June 30, 2016	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	61,875	$	369	$	8,234	$	70,478
Nonowner-occupied		74,319		1,717		7,623		83,659
Construction		29,554		----		545		30,099
Commercial and industrial		79,906		----		3,459		83,365
Total	$	245,654	$	2,086	$	19,861	$	267,601

December 31, 2015	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	62,287	$	6,738	$	4,433	$	73,458
Nonowner-occupied		61,577		6,305		4,120		72,002
Construction		23,080		----		772		23,852
Commercial and industrial		70,852		5,232		5,852		81,936
Total	$	217,796	$	18,275	$	15,177	$	251,248

The Company also obtains the credit scores of its borrowers upon origination (if available by the credit bureau), but the scores are not updated. The Company focuses mostly on the performance and repayment ability of the borrower as an indicator of credit risk and does not consider a borrower's credit score to be a significant influence in the determination of a loan's credit risk grading.

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For residential and consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment of residential and consumer loans by class of loans based on repayment activity as of June 30, 2016 and December 31, 2015:

June 30, 2016	Consumer
	Automobile		Home Equity			Other			Residential Real Estate			Total
Performing	$	46,167		$	19,680		$	43,607		$	223,404		$	332,858
Nonperforming		72			32			46			2,327			2,477
Total	$	46,239		$	19,712		$	43,653		$	225,731		$	335,335

December 31, 2015	Consumer
	Automobile		Home Equity			Other			Residential Real Estate			Total
Performing	$	44,521		$	20,745		$	45,218		$	221,807		$	332,291
Nonperforming		45			96			4			2,068			2,213
Total	$	44,566		$	20,841		$	45,222		$	223,875		$	334,504

The Company, through its subsidiaries, originates residential, consumer, and commercial loans to customers located primarily in the southeastern areas of Ohio as well as the western counties of West Virginia.  Approximately 5.53% of total loans were unsecured at June 30, 2016, down from 6.06% at December 31, 2015.

NOTE 5 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees.  The Bank's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual amount of those instruments.  The contract amounts of these instruments are not included in the consolidated financial statements.  At June 30, 2016, the contract amounts of these instruments totaled approximately $66,322, compared to $62,415 at December 31, 2015.  The Bank uses the same credit policies in making commitments and conditional obligations as it does for instruments recorded on the balance sheet.  Since many of these instruments are expected to expire without being drawn upon, the total contract amounts do not necessarily represent future cash requirements.

NOTE 6 - OTHER BORROWED FUNDS

Other borrowed funds at June 30, 2016 and December 31, 2015 are comprised of advances from the Federal Home Loan Bank ("FHLB") of Cincinnati and promissory notes.  At June 30, 2016 and December 31, 2015, FHLB Borrowings included $95 and $117 in capitalized lease obligations, respectively.

	FHLB Borrowings		Promissory Notes		Totals
June 30, 2016	$	27,493	$	3,918	$	31,411
December 31, 2015	$	20,028	$	3,918	$	23,946

Pursuant to collateral agreements with the FHLB, advances were secured by $217,358 in qualifying mortgage loans, $79,674 in commercial loans and $5,081 in FHLB stock at June 30, 2016.  Fixed-rate FHLB advances of $27,398 mature through 2042 and have interest rates ranging from 1.34% to 3.31% and a year-to-date weighted average cost of 2.09%.  There were no variable-rate FHLB borrowings at June 30, 2016.

At June 30, 2016, the Company had a cash management line of credit enabling it to borrow up to $75,000 from the FHLB.  All cash management advances have an original maturity of 90 days.  The line of credit must be renewed on an annual basis.  There was $75,000 available on this line of credit at June 30, 2016.

Based on the Company's current FHLB stock ownership, total assets and pledgeable loans, the Company had the ability to obtain borrowings from the FHLB up to a maximum of $180,606 at June 30, 2016.  Of this maximum borrowing capacity, the Company had $114,409 available to use as additional borrowings, of which $75,000 could be used for short-term, cash management advances, as mentioned above.

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Promissory notes, issued primarily by Ohio Valley, are due at various dates through a final maturity date of May 16, 2018, and have fixed rates ranging from 1.25% to 1.50% and a year-to-date weighted average cost of 1.44% at June 30, 2016, as compared to 1.38% at December 31, 2015.  Promissory notes payable by Ohio Valley to related parties totaled $360 at June  30, 2016.

Letters of credit issued on the Bank's behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $38,800 at June 30, 2016 and $34,800 at December 31, 2015.

Scheduled principal payments as of June 30, 2016:

	FHLB Borrowings		Promissory Notes		Totals
2016	$	1,331	$	1,904	$	3,235
2017		5,022		1,502		6,524
2018		1,967		512		2,479
2019		1,906		----		1,906
2020		1,817		----		1,817
Thereafter		15,450		----		15,450
	$	27,493	$	3,918	$	31,411

NOTE 7 – SEGMENT INFORMATION

The reportable segments are determined by the products and services offered, primarily distinguished between banking and consumer finance. They are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar. Loans, investments, and deposits provide the majority of the net revenues from the banking operation, while loans provide the majority of the net revenues for the consumer finance segment. All Company segments are domestic.

Total revenues from the banking segment, which accounted for the majority of the Company's total revenues, totaled 89.1% and 88.9% of total consolidated revenues for the quarters ended June 30, 2016 and 2015, respectively.

The accounting policies used for the Company's reportable segments are the same as those described in Note 1 - Summary of Significant Accounting Policies. Income taxes are allocated based on income before tax expense.

Information for the Company's reportable segments is as follows:

	Three Months Ended June 30, 2016
	Banking		Consumer Finance		Total Company
Net interest income	$	7,617	$	589	$	8,206
Provision expense		130		11		141
Noninterest income		1,734		127		1,861
Noninterest expense		7,099		674		7,773
Tax expense		438		9		447
Net income		1,684		22		1,706
Assets		814,176		12,273		826,449

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	Three Months Ended June 30, 2015
	Banking		Consumer Finance			Total Company
Net interest income	$	7,502	$	647		$	8,149
Provision expense		850		(51	)		799
Noninterest income		1,786		131			1,917
Noninterest expense		6,866		688			7,554
Tax expense		256		47			303
Net income		1,316		94			1,410
Assets		787,363		13,010			800,373

	Six Months Ended June 30, 2016
	Banking		Consumer Finance		Total Company
Net interest income	$	15,288	$	2,018	$	17,306
Provision expense		505		115		620
Noninterest income		4,566		530		5,096
Noninterest expense		14,293		1,449		15,742
Tax expense		1,169		333		1,502
Net income		3,887		651		4,538
Assets		814,176		12,273		826,449

	Six Months Ended June 30, 2015
	Banking		Consumer Finance		Total Company
Net interest income	$	15,063	$	2,016	$	17,079
Provision expense		675		46		721
Noninterest income		4,829		577		5,406
Noninterest expense		13,573		1,408		14,981
Tax expense		1,363		386		1,749
Net income		4,281		753		5,034
Assets		787,363		13,010		800,373

NOTE 8 – MERGERS AND ACQUISITIONS

As of the close of business on August 5, 2016, Ohio Valley completed its merger with Milton Bancorp, Inc. ("Milton Bancorp"), pursuant to the terms of the Agreement and Plan of Merger dated as of January 7, 2016, by and between Ohio Valley and Milton Bancorp (the "Merger Agreement").  Pursuant to the terms of the Merger Agreement, Milton Bancorp was merged with and into Ohio Valley (the "Merger").  Immediately following the Merger, Milton Bancorp's wholly-owned subsidiary, The Milton Banking Company, was merged with and into the Bank.  As a result of the Merger and in accordance with the terms of the Merger Agreement, each Milton Bancorp share was converted into the right to receive either 1,636 Ohio Valley common shares, no par value, or cash in the amount of $37,219, subject to certain allocation procedures set forth in the Merger Agreement pursuant to which 80% of the 400 outstanding Milton Bancorp common shares were converted into the right to receive Ohio Valley common shares and the remaining 20% of the outstanding Milton Bancorp common shares were converted into the right to receive cash.  After paying cash in lieu of fractional shares, Ohio Valley's outstanding common shares increased by 523,518 shares as of August 5, 2016.  Ohio Valley financed part of the cash portion of the purchase price through $5,000 in borrowed funds.  After the Merger, the Company's assets totaled approximately $950 million and branches increased to 19 locations.  At the acquisition date, Milton had $113,320 in loans, $119,219 in deposits and no borrowings.  

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(dollars in thousands, except share and per share data)

Forward Looking Statements

Except for the historical statements and discussions contained herein, statements contained in this report constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 and as defined in the Private Securities Litigation Reform Act of 1995.  Such statements are often, but not always, identified by the use of such words as "believes," "anticipates," "expects," and similar expressions.  Such statements involve various important assumptions, risks, uncertainties, and other factors, many of which are beyond our control and which could cause actual results to differ materially from those expressed in such forward looking statements.  These factors include, but are not limited to:  changes in political, economic or other factors, such as inflation rates, recessionary or expansive trends, taxes, the effects of implementation of legislation and the continuing economic uncertainty in various parts of the world; competitive pressures; fluctuations in interest rates; the level of defaults and prepayment on loans made by the Company; unanticipated litigation, claims, or assessments; fluctuations in the cost of obtaining funds to make loans; and regulatory changes.  Additional detailed information concerning a number of important factors which could cause actual results to differ materially from the forward-looking statements contained in management's discussion and analysis is available in the Company's filings with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, including the disclosure under the heading "Item 1A. Risk Factors" of Part 1 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof.  The Company undertakes no obligation and disclaims any intention to republish revised or updated forward looking statements, whether as a result of new information, unanticipated future events or otherwise.

Financial Overview

The Company is primarily engaged in commercial and retail banking, offering a blend of commercial and consumer banking services within southeastern Ohio as well as western West Virginia.  The banking services offered by the Bank include the acceptance of deposits in checking, savings, time and money market accounts; the making and servicing of personal, commercial, floor plan and student loans; the making of construction and real estate loans; and credit card services.  The Bank also offers individual retirement accounts, safe deposit boxes, wire transfers and other standard banking products and services.  In addition, the Bank is one of a limited number of financial institutions that facilitates the payment of tax refunds through a third-party tax refund product provider.  The Bank has facilitated the payment of these tax refunds through electronic refund check/deposit ("ERC/ERD") transactions.  ERC/ERD transactions involve the payment of a tax refund to the taxpayer after the Bank has received the refund from the federal/state government.  ERC/ERD transactions occur primarily during the tax refund season, typically during the first quarter of each year.  Loan Central also provides refund anticipation loans ("RALs") to its customers.  RALs are short-term cash advances against a customer's anticipated income tax refund.

Net income totaled $1,706 during the second quarter of 2016, an increase of $296, or 21.0%, compared to $1,410 during the second quarter of 2015.  Earnings per share for the second quarter of 2016 also increased by $.07, or 20.6%, compared to the second quarter of 2015, to finish at $.41 per share.  Conversely, the Company's net income during the six months ended June 30, 2016 totaled $4,538, a decrease of $496, or 9.9%, compared to $5,034 during the six months ended June 30, 2015.  Earnings per share during the first half of 2016 decreased by $.12, or 9.8%, compared to the first half of 2015, to finish at $1.10 per share.  Although the Company benefited from lower provision expense, which improved the second quarter earnings results, the lower year-to-date performance continues to be impacted by growing merger related expenses combined with lower ERC/ERD processing fees. The annualized net income to average asset ratio, or return on assets ("ROA"), decreased to 1.05% at June 30, 2016, compared to 1.19% at June 30, 2015.  The Company's net income to average equity ratio, or return on equity ("ROE"), also decreased to 9.88% at June 30, 2016, compared to 11.53% at June 30, 2015.

Net interest income for the three and six months ended June 30, 2016 showed positive growth over the same periods in 2015. The increase was primarily due to higher interest revenue recorded from the Company's interest-bearing Federal Reserve Clearing account.  During the first half of 2016, average interest-bearing balances maintained at the Federal Reserve grew 6.1% over the first half of 2015, impacted by seasonal tax processing activity.  However, it has been the Federal Reserve's action of increasing short-term interest rates in December 2015 by 25 basis points that contributed most to higher interest income on deposits.  Further contributing to net interest income growth was lower deposit expenses, as rates continued to adjust downward during 2015.  As a result, the average cost of interest-bearing deposit liabilities finished at 0.41% during the first half of 2016, as compared to 0.44% during the same period in 2015.  Partially offsetting these positive contributions to net interest income was a $4,932 decline in average earning loans during the first half of 2016.  The decrease in average loan balances was primarily related to a decrease in average participation loans of $13,458 due to an increase in payoffs.

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During the three months ended June 30 2016, provision expense decreased $658 from the prior year's second quarter, and decreased $101 during the first half of 2016 versus the same period in 2015.  The decrease in provision expense is consistent with the decrease in both net charge-offs and the general reserve for loan losses.  During both the three and six months ended June 30, 2016, net charge-offs decreased $1,522 and $1,277, as compared to the same periods in 2015, respectively.  The decrease was largely due to the charge-off of a collateral dependent impaired loan's specific reserve, which occurred in the second quarter of 2015.  Furthermore, the general reserve for loan losses decreased due to improving economic risk factors resulting from lower historical loan losses and smaller criticized asset balances.  The allowance for loan losses was 1.15 percent of total loans at June 30, 2016, compared to 1.13 percent at December 31, 2015 and 1.26 percent at June 30, 2015.

Total noninterest income during the three months ended June 30, 2016 decreased $56, or 2.9%, from the second quarter in 2015, and decreased $310, or 5.7%, during the first half of 2016 as compared to the same period in 2015.  The decreases were largely due to less tax processing fees through ERC/ERD transactions.  Although the volume of tax refunds processed increased during the first half of 2016, tax refund processing fees totaled $2,024, a decrease of $326 from the same period during 2015.  This decrease was due to the per-item fees received by the Company being lower under the new contract with the third-party tax refund product provider.  The remaining noninterest categories were impacted by lower gains on sale of securities combined with increasing service charges on deposit accounts, earnings from tax-free bank owned life insurance ("BOLI") investments and interchange fees earned on debit and credit card transactions.

Total noninterest expense increased $219 for the second quarter of 2016, and increased $761 during the first half of 2016, as compared to the same periods in 2015.  Higher overhead expense was primarily related to merger expenses related to the merger with Milton Bancorp, as well as increases in salaries and employee benefit costs due to annual merit increases and higher health insurance.

At June 30, 2016, total assets were $826,449, compared to $796,285 at year-end 2015, with the increase due mostly to growth in loan balances.  Gross loan balances of $602,936 at June 30, 2016 improved by $17,184 from year-end 2015, largely from new commercial real estate loan originations during the second quarter of 2016 within the Company's Athens, Ohio market.  Asset growth was also impacted by an $11,447 increase to interest-bearing deposits from the Company's Federal Reserve Clearing account that were generated from seasonal tax clearing activities during the first half of 2016. Total investment securities also increased 1.9% from year-end 2015, due mostly to new purchases of mortgage-backed securities experienced during the second quarter of 2016.

Total liabilities were $731,653 at June 30, 2016, up $25,838 since December 31, 2015. Total deposit balances experienced continued growth during 2016, increasing $17,569 compared to year-end 2015. Interest-bearing deposits accounted for $19,500 of the increase, which came from growth in municipal public fund deposits and statement savings account balances.

At June 30, 2016, total shareholders' equity was $94,796, up $4,326 since December 31, 2015.  Regulatory capital ratios remained significantly higher than the "well capitalized" minimums.

Comparison of Financial Conditionat June 30, 2016 and December 31, 2015

The following discussion focuses, in more detail, on the consolidated financial condition of the Company at June 30, 2016 compared to December 31, 2015.  This discussion should be read in conjunction with the interim consolidated financial statements and the footnotes included in this Form 10‑Q.

Cash and Cash Equivalents

At June 30, 2016, cash and cash equivalents increased $11,937, to finish at $57,467, compared to $45,530 at December 31, 2015.  The increase in cash and cash equivalents was largely due to deposit liability growth from year-end 2015, mostly from seasonal increases in ERC/ERD transactions.  The Company continues to utilize its interest-bearing Federal Reserve Bank clearing account to maintain these excess funds, which are expected to decrease during the remainder of 2016.  The interest rate paid on both the required and excess reserve balances is based on the targeted federal funds rate established by the Federal Open Market Committee, which currently is 0.50%.  In December 2015, short-term interest rates were increased by 25 basis points, which had a corresponding effect to the interest revenue growth experienced during the three and six months ended June 30, 2016 on Federal Reserve Bank clearing account balances.  This interest rate is higher than what the Company would have received from its investments in federal funds sold, currently in range of less than 0.50%.  Furthermore, Federal Reserve Bank balances are 100% secured.

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As liquidity levels vary continuously based on consumer activities, amounts of cash and cash equivalents can vary widely at any given point in time.  The Company's focus will be to invest excess funds into longer-term, higher-yielding assets, primarily loans, when the opportunities arise.

Certificates of deposit

At June 30, 2016, the Company had $1,470 in certificates of deposit owned by the Captive, unchanged from year-end 2015.  The deposits on hand at June 30, 2016 consist of six certificates with maturity terms ranging from 1.5 to 3 years.

Securities

The balance of total securities increased $2,162, or 1.9%, compared to year-end 2015.  The increase came mostly from U.S. Government agency ("Agency") mortgage-backed securities, which increased $3,695, or 4.5%, from year-end 2015.  The Company's investment securities portfolio is made up mostly of agency mortgage-backed securities, representing 76.0% of total investments at June 30, 2016.   During the first half of 2016, the Company invested $10,278 in new Agency mortgage-backed securities, while receiving principal repayments of $7,808.  The monthly repayment of principal has been the primary advantage of Agency mortgage-backed securities as compared to other types of investment securities, which deliver proceeds upon maturity or call date.

Loans

The loan portfolio represents the Company's largest asset category and is its most significant source of interest income. Gross loan balances totaled $602,936 at June 30, 2016, representing an increase of $17,184, or 2.9%, as compared to $585,752 at December 31, 2015.  Loan balance growth came mostly from higher commercial real estate balances.

The commercial lending segment increased $16,353, or 6.5%, from year-end 2015, which came mostly from the commercial real estate loan portfolio, which increased $14,924, or 8.8%, from year-end 2015.  The commercial real estate loan segment comprises the largest portion of the Company's total commercial loan portfolio, representing 68.8% at June 30, 2016.  In December 2015, the Company opened a loan production office in Athens, Ohio to expand its market presence.  As a result, growing loan demand within the Athens, Ohio market during the second quarter of 2016 was key to higher commercial real estate balances at June 30, 2016.  Furthermore, loan volume contributed to construction loans being up $6,247, or 26.2%, from year-end 2015.  Commercial and industrial loans consist of loans to corporate borrowers primarily in small to mid-sized industrial and commercial companies that include service, retail and wholesale merchants.  Collateral securing these loans includes equipment, inventory, and stock.  While management believes lending opportunities exist in the Company's markets, future commercial lending activities will depend upon economic and related conditions, such as general demand for loans in the Company's primary markets, interest rates offered by the Company, the effects of competitive pressure and normal underwriting considerations.  Management will continue to place emphasis on its commercial lending, which generally yields a higher return on investment as compared to other types of loans.

Consumer loan balances decreased $1,025, or 0.9%, from year-end 2015.  This decrease was impacted most by a 3.5% decrease in other consumer loan balances that include mobile homes, recreational vehicles, consumer real estate and unsecured loans.  Furthermore, consumer home equity lines were down $1,129, or 5.4%, from year-end 2015.  These decreases were partially offset by a 3.8% increase in automobile loans.  Automobile loans represent the Company's largest consumer loan segment at 42.2% of total consumer loans.  The Company will continue to monitor its auto lending segment while maintaining strict loan underwriting processes to limit future loss exposure.

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The residential real estate loan segment comprises the largest portion of the Company's loan portfolio at 37.4% and consists primarily of one- to four-family residential mortgages and carries many of the same customer and industry risks as the commercial loan portfolio.  Residential real estate loan balances during the first half of 2016 increased $1,856, or 0.8%, from year-end 2015.  Movement within the real estate portfolio consists of increasing short-term adjustable-rate mortgages partially offset by decreasing long-term fixed-rate mortgages. As part of management's interest rate risk strategy, the Company continues to sell most of its long-term fixed-rate residential mortgages to the Federal Home Loan Mortgage Corporation, while maintaining the servicing rights for those mortgages.  A customer that does not qualify for a long-term, secondary market loan may choose from one of the Company's other adjustable-rate mortgage products, which contributed to higher balances of adjustable-rate mortgages from year-end 2015.

Allowance for Loan Losses

The Company established a $6,934 allowance for loan losses at June 30, 2016, which was up from the $6,648 allowance at year-end 2015. The allowance reserves were impacted by higher specific allocations from year-end 2015. Specific allocations of the allowance for loan losses identify loan impairment by measuring fair value of the underlying collateral and the present value of estimated future cash flows.  When re-evaluating the impaired loan balances to their corresponding collateral values at June 30, 2016, a specific allocation of $2,630 was needed to fund the allowance for loan losses, representing an increase of $466, or 21.5%, from year-end 2015.  This higher reserve allocation was impacted mostly by one impaired commercial real estate loan relationship that required specific reserves of $1,585 during the second quarter of 2016.  This was partially offset by the reduction of $1,160 in specific reserves that were previously related to one commercial and industrial loan relationship.  During the second quarter of 2016, a re-evaluation of this borrower's financial performance identified significant improvement, which resulted in a credit quality upgrade to the borrower relationship and no identified collateral impairment at June 30, 2016.  

As part of the Company's quarterly analysis of the allowance for loan losses, management reviewed various factors that directly impact the general allocation need of the allowance, which include:  historical loan losses, loan delinquency levels, local economic conditions and unemployment rates, criticized/classified asset coverage levels and loan loss recoveries. During the first half of 2016, the Company experienced a decrease in its criticized assets from year-end 2015, which contributed to most of the general allocation decreases within all segments of the loan portfolio.  General reserve decreases were also impacted by a decreasing historical loss factor from year-end 2015. The change in criticized assets from year-end 2015 came primarily from owner-occupied commercial real estate loans and commercial and industrial loans.  As a result, the general allocation component of the allowance for loan losses decreased $180, or 4.0%, from year-end 2015. 

The Company also experienced improvement in its troubled assets, with nonperforming loans to total loans finishing at 1.14% at June 30, 2016, as compared to 1.24% at December 31, 2015.  The Company's nonperforming assets to total assets finished at 1.08% at June 30, 2016, a decrease of 13 basis points from year-end 2015.  Impaired loans at June 30, 2016 increased $4,959, or 28.8%, from year-end 2015.  This was largely from a credit risk downgrade of one owner-occupied commercial real estate relationship during the second quarter of 2016 and debt restructures of two nonowner-occupied commercial real estate loans during the first quarter of 2016.

The Company maintained its allowance for loan losses to total loans ratio at 1.15% at June 30, 2016 and 1.13% at year-end 2015.  Management believes that the allowance for loan losses at June 30, 2016 was adequate and reflected probable incurred losses in the loan portfolio.  There can be no assurance, however, that adjustments to the allowance for loan losses will not be required in the future.  Changes in the circumstances of particular borrowers, as well as adverse developments in the economy are factors that could change and make adjustments to the allowance for loan losses necessary.  Asset quality will continue to remain a key focus, as management continues to stress not just loan growth, but quality in loan underwriting as well. 

Deposits

Deposits continue to be the most significant source of funds used by the Company to meet obligations for depositor withdrawals, to fund the borrowing needs of loan customers, and to fund ongoing operations.  Total deposits at June 30, 2016 increased $17,569, or 2.7%, from year-end 2015.  This deposit growth came primarily from interest-bearing NOW accounts, which increased $18,833, or 15.1%, during the first half of 2016 as compared to year-end 2015.  This ncrease was largely driven by growth in municipal NOW products.

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Also during the first half of 2016, the Company experienced an increase in its noninterest business checking account balances, which increased $12,697, or 12.9%, from year-end 2015.  This increase was largely the result of ERC/ERD tax refund items processed during the first quarter of 2016.  During 2016, the Company benefited from the successful volume increase in ERC/ERD transactions.  As a result of the tax processing activity being seasonal, the elevated balances within the Company's business checking accounts should continue to decrease during the remainder of 2016.

During the first half of 2016, time deposits decreased $9,791, or 6.2%, from year-end 2015.  As CD market rates continue to adjust downward, the spread between a short-term CD rate and a statement savings rate has become small enough that many customers choose to invest balances into a more liquid product, perhaps hoping for rising rates in the near future.  This change in time deposits from year-end 2015 fits within management's strategy of focusing on more "core" deposit balances that include interest-bearing demand, savings, money market and noninterest-bearing deposit balances.

While facing increased competition for deposits in its market areas, the Company will continue to emphasize growth and retention in its core deposit relationships during the remainder of 2016, reflecting the Company's efforts to reduce its reliance on higher cost funding and improving net interest income.

Other Borrowed Funds

Other borrowed funds were $31,411 at June 30, 2016, an increase of $7,465, or 31.2%, from year-end 2015. The increase was related to management's decision to fund specific fixed-rate loans with like-term FHLB advances during the first and second quarters of 2016. While deposits continue to be the primary source of funding for growth in earning assets, management will continue to utilize Federal Home Loan Bank advances and promissory notes to help manage interest rate sensitivity and liquidity.

Shareholders' Equity

The Company maintains a capital level that exceeds regulatory requirements as a margin of safety for its depositors. At June 30, 2016, the Bank's capital exceeded the minimum requirements to be deemed "well capitalized" under applicable prompt corrective action regulations. Total shareholders' equity at June 30, 2016 of $94,796 increased $4,326, or 4.8%, as compared to $90,470 at December 31, 2015. Contributing most to this increase was year-to-date net income of $4,538, partially offset by cash dividends paid of $1,735, or $.42 per share.

Comparison of Results of Operations

for the Three and Six Months Ended

June 30, 2016 and 2015

The following discussion focuses, in more detail, on the consolidated results of operations of the Company for the three and six months ended June 30, 2016 compared to the same period in 2015. This discussion should be read in conjunction with the interim consolidated financial statements and the footnotes included in this Form 10‑Q.

Net Interest Income

The most significant portion of the Company's revenue, net interest income, results from properly managing the spread between interest income on earning assets and interest expense incurred on interest-bearing liabilities.  During the second quarter of 2016, net interest income increased $57, or 0.7%, as compared to the second quarter of 2015.  During the six months ended June 30, 2016, net interest income increased $227, or 1.3%, as compared to the six months ended June 30, 2015.  The improvement came primarily from higher interest income on interest-bearing deposits with banks and lower premium expenses on investment securities, while also benefiting from a reduction in deposit expenses.

Total interest and fee income recognized on the Company's earning assets increased $47, or 0.5%, during the second quarter of 2016, which contributed to a year-to-date increase of $190, or 1.0%, as compared to the same periods in 2015, mostly impacted by other interest income sources.  During the three and six months ended June 30, 2016, total other interest income increased $45 and $146, as compared to the same periods in 2015, respectively.  The increase was primarily due to higher interest revenue recorded from the Company's interest-bearing Federal Reserve Clearing account.  The Company continues to utilize its Federal Reserve Clearing account to manage seasonal tax refund deposits and fund earning asset growth.  This interest-bearing account carried an interest rate of 0.25% during most of 2015.  In December 2015, the Federal Reserve increased short-term rates by 25 basis points, which increased the Federal Reserve Clearing account's interest rate from 0.25% to 0.50%.  The timing of this rate adjustment benefited the Company, as it entered into the first quarter experiencing significant levels of excess funds impacted by the large volume of ERC/ERD transactions that were maintained within the Federal Reserve Clearing account.

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The Company further benefited from increased earnings within investment securities, which increased $16, or 2.7%, during the second quarter of 2016, and increased $30, or 2.6%, during the first half of 2016, as compared to the same periods in 2015.  The improvement came primarily from Agency mortgage-backed securities.  The investment prices for Agency mortgage-backed securities continue to adjust closer to their par values, resulting in less monthly premium expense and higher return yields.

The Company continues to show signs of loan origination improvement, particularly within the commercial estate loan portfolio.  While this loan demand has contributed to increasing origination fees, loan yields have continued to remain below the year before, which have limited interest and fee income growth.  As a result, the Company's total interest and fees on loans decreased $15, or 0.2%, during the second quarter of 2016, while the Company maintained year-to-date improvement over the prior year, increasing $13, or 0.1%.

Total yields on the Company's earning assets finished comparable to the prior year.  While yields on loans remain below the prior year, yields on investment securities continue to improve, with newer Agency mortgage-backed security purchases being acquired at higher investment rates.  Asset yields have also been positively impacted by the Federal Reserve's 25 basis point increase in short-term interest rates from December 2015.  The effect of this rate adjustment was felt mostly in the higher average balances associated with the Federal Reserve Clearing account due to seasonal tax refund deposits.  As a result of these factors, the earning asset yield at June 30, 2016 was 4.70%, unchanged from June 30, 2015.

Total interest expense incurred on the Company's interest-bearing liabilities during the second quarter of 2016 decreased $10, or 1.4%, and decreased $37, or 2.6%, during the first half of 2016, as compared to the same periods in 2015.  The decreases have primarily been due to a sustained low-rate environment that has impacted the repricings of various Bank deposit products, including certain interest-bearing demand accounts.  This has contributed to a lower weighted average cost of the Company's core deposits, which finished at 0.23% at June 30, 2016, as compared to 0.28% at June 30, 2015. The Company continues to utilize more of its lower cost, core deposit funding sources to further reduce interest expense.  As a result, the Company's average interest- and non-interest bearing core deposits increased $32,072, or 5.8%, while the higher costing, average time deposit balances decreased $17,873, or 10.4%, during the first half of 2016, as compared to the same period in 2015.  The decreases in average market interest rates and the continued emphasis on utilizing lower costing deposit balances have caused the Company's total weighted average costs on interest-bearing deposits to decrease by 3 basis points from 0.44% at June 30, 2015 to 0.41% at June 30, 2016.

During 2016, the Company has benefited from a decline in funding costs and a net asset yield that remains stable due to a short-term interest rate increase and improved reinvestment rates on security purchases.  As a result, the Company's net interest margin had comparable results to the prior year, finishing at 4.22% during the second quarter of 2016 and 4.36% during the first half of 2016, as compared to 4.24% and 4.35% during the same periods in 2015, respectively.  While the Company benefited in the first half of 2016 from a heightened level of excess funds within its Federal Reserve Clearing account, the focus will be on re-deploying the retained portion of these funds to higher yielding assets as opportunities arise. The Company will continue to face pressure on its net interest income and margin improvement unless loan balances continue to expand and remain a larger component of overall earning assets.

Provision for Loan Losses

During the second quarter of 2016, the Company experienced a decrease in provision expense of $658, or 82.4%, as compared to the second quarter of 2015.  As a result, provision expense during the six months ended June 30, 2016 decreased by $101, or 14.0%, as compared to the first half of 2015.  The quarterly decrease in provision expense was primarily due to a decrease in criticized assets that resulted in a lower general reserve allocation at June 30, 2016.  As previously mentioned, the re-evaluation of one commercial and industrial loan relationship resulted in the credit risk upgrade of $5,413 from a criticized loan to a watch loan classification during the second quarter of 2016.  This contributed to a lower criticized asset factor within the general allocation of the allowance for loan losses.

Net charge-offs decreased $1,522 during the second quarter of 2016, and decreased $1,277 during the first half of 2016, as compared to the same periods in 2015. The decrease was largely from a $1,304 charge-off of a collateral dependent impaired loan's specific reserve which occurred in the second quarter of 2015.  Since the specific reserve had been allocated for during 2014, there was no corresponding provision expense impact associated with this charge-off in 2015.  Excluding the charge-off of this specific reserve, the remaining net charge-offs during the quarterly and year-to-date periods at June 30, 2016 were comparable to 2015.  

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Future provisions to the allowance for loan losses will continue to be based on management's quarterly in-depth evaluation that is discussed in further detail under the caption "Critical Accounting Policies - Allowance for Loan Losses" within this Management's Discussion and Analysis.

Noninterest Income

Noninterest income for the three months ended June 30, 2016 decreased $56, or 2.9%, from the three months ended June 30, 2015.  Noninterest income for the six months ended June 30, 2016 also decreased $310, or 5.7%, from the six months ended June 30, 2015.  Lower noninterest income during 2016 was largely affected by the Company's seasonalERC/ERD fees, which decreased $326, or 13.9%, during the year-to-date period, while showing comparable earnings during the quarter-to-date period.  In October 2014, the Bank entered into a new agreement with the third-party tax refund product provider, which lowered the per-item fee associated with each refund facilitated.  As a result, even though the Company experienced an increase in the number of ERC/ERD transactions that were facilitated, the lower fee structure caused tax processing revenues to be lower than the year before.  As a result of ERC/ERD fee activity being mostly seasonal during the first half of 2016, only a minimal amount of income is expected during the second half of 2016. 

Also impacting lower noninterest income during both the quarterly and year-to-date periods of 2016 was gains on sale of securities. During the second quarter of 2015, the Company sold some of its lower-yielding, Agency mortgage-backed securities at a gain of $135, while reinvesting the proceeds into higher-yielding securities. The Company has not sold any of its securities during 2016.

The Company's remaining noninterest income categories were collectively up $64, or 4.2%, during the second quarter of 2016, and up $151, or 5.2%, during the first half of 2016, as compared to the same periods in 2015.  These changes were primarily due to increases in service charges on deposit accounts, earnings from tax-free BOLI investments and interchange fees earned on debit and credit card transactions. 

Noninterest Expense

Noninterest expense during the second quarter of 2016 increased $219, or 2.9%, from the second quarter in 2015.  Noninterest expense during the first half of 2016 also increased $761, or 5.1%, over the first half of 2015.  Contributing most to the increase in net overhead expense were merger related expenses and higher salaries and employee benefits.

The Company's largest noninterest expense item, salaries and employee benefits, increased $102, or 2.3%, during the three months ended June 30, 2016, and $272, or 3.1%, during the six months ended June 30, 2016, as compared to the same periods in 2015.  The increase was largely due to annual merit increases and higher health insurance costs.

In January 2016, the Company entered into a merger agreement with Milton Bancorp, which resulted in the business combination of both holding companies and their respective bank subsidiaries.  In preparation for the merger, both the Company and the Bank have experienced various merger related expenses totaling $134 during the second quarter of 2016 and $361 during the first half of 2016.  The merger was closed on August 5, 2016.  The Company anticipates merger expenses to increase throughout the remainder of the year.

The remaining noninterest expense categories were collectively down $16, or 0.5%, during the second quarter of 2016, as compared to the second quarter of 2015.   During the first half of 2016, the remaining noninterest expense categories were collectively up $128, or 2.1%, as compared to the first half of 2015. The changes during both periods were primarily due to higher software and foreclosure costs combined with lower data processing and professional fee expenses.

The Company's efficiency ratio is defined as noninterest expense as a percentage of fully tax-equivalent net interest income plus noninterest income. The effects from provision expense are excluded from the efficiency ratio. Management continues to place emphasis on managing its balance sheet mix and interest rate sensitivity as well as developing more innovative ways to generate noninterest revenue.  During the quarterly and year-to-date periods ending June 30, 2016, the Company was successful in generating more net interest income primarily due to higher interest-bearing deposits with banks while reducing funding costs.  However, a 13.9% year-over-year decline in tax processing fees combined with higher personnel and merger costs caused overhead expense to outpace net revenue levels during 2016.  As a result, the Company's efficiency levels have regressed, finishing at 76.0% and 69.3% during both the quarterly and year-to-date periods ended June 30, 2016, as compared to the stronger 73.8% and 65.6% efficiency levels during the same periods in 2015.

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Capital Resources

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies.  Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by regulators.  Failure to meet capital requirements can initiate regulatory action.  The final rules implementing Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective for the Company and the Bank on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019.   Under the final rules, minimum requirements increased for both the quantity and quality of capital held by the Company and the Bank. The rules include a new common equity tier 1 capital to risk-weighted assets ratio of 4.5% and a capital conservation buffer of 2.5% of risk-weighted assets. The capital conservation buffer began to phase in on January 1, 2016 at 0.625%, and will be phased in over a four-year period, increasing by the same amount on each subsequent January 1, until fully phased-in on January 1, 2019.  Further, Basel III rules increased the minimum ratio of tier 1 capital to risk-weighted assets increased from 4.0% to 6.0% and all banks are now subject to a 4.0% minimum leverage ratio. The required total risk-based capital ratio was unchanged. Failure to maintain the required common equity tier 1 capital conservation buffer will result in potential restrictions on a bank's ability to pay dividends, repurchase stock and/or pay discretionary compensation to its employees.

Effective May 15, 2015, the Federal Reserve Board amended the Small Bank Holding Company Policy ("the Policy") that increased from $500 million to $1 billion the asset threshold for a bank to qualify under the Policy.  The Company qualifies for treatment under the Policy and, at June 30, 2016 and year-end 2015, is no longer subject to the consolidated capital rules at the bank holding company level.  The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital.  Management believes that as of June 30, 2016 and year-end 2015, the Bank met all capital adequacy requirements to which it was subject.  Furthermore, when compared to the regulatory minimum, the Bank's tier 1, common equity tier 1, and total risk-based capital ratios exceeded the new capital conservation buffer of 0.625% at June 30, 2016.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At June 30, 2016 and year-end 2015, the Bank met the capital requirements to be deemed well capitalized under the regulatory framework for prompt corrective action.

The following table summarizes the capital ratios of the Company and Bank and the minimum regulatory requirements:

	6/30/16		12/31/15		Regulatory Minimum
Common equity tier 1 risk-based capital ratio
Company		15.8%		15.6%		N/A
Bank		15.2%		15.1%		4.5%
Tier 1 risk-based capital ratio
Company		17.2%		17.1%		N/A
Bank		15.2%		15.1%		6.0%
Total risk-based capital ratio
Company		18.4%		18.2%		N/A
Bank		16.4%		16.3%		8.0%
Leverage ratio
Company		11.9%		12.2%		N/A
Bank		10.5%		10.8%		4.0%

Cash dividends paid by the Company were $1,735 during the first half of 2016 and $1,936 during the first half of 2015.  The year-to-date dividend rate was $0.42 per share for 2016 and $0.47 for 2015.

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Liquidity

Liquidity relates to the Company's ability to meet the cash demands and credit needs of its customers and is provided by the ability to readily convert assets to cash and raise funds in the market place. Total cash and cash equivalents, held to maturity securities maturing within one year and available for sale securities, totaling $152,014, represented 18.4% of total assets at June 30, 2016. In addition, the FHLB offers advances to the Bank, which further enhances the Bank's ability to meet liquidity demands. At June 30, 2016, the Bank could borrow an additional $114,409 from the FHLB, of which $75,000 could be used for short-term, cash management advances. Furthermore, the Bank has established a borrowing line with the Federal Reserve. At June 30, 2016, this line had total availability of $42,442. Lastly, the Bank also has the ability to purchase federal funds from a correspondent bank.

Off-Balance Sheet Arrangements

As discussed in Note 5 – Financial Instruments with Off-Balance Sheet Risk, the Company engages in certain off-balance sheet credit-related activities, including commitments to extend credit and standby letters of credit, which could require the Company to make cash payments in the event that specified future events occur. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Standby letters of credit are conditional commitments to guarantee the performance of a customer to a third party. While these commitments are necessary to meet the financing needs of the Company's customers, many of these commitments are expected to expire without being drawn upon. Therefore, the total amount of commitments does not necessarily represent future cash requirements.

Critical Accounting Policies

The most significant accounting policies followed by the Company are presented in Note A to the financial statements in the Company's 2015 Annual Report to Shareholders. These policies, along with the disclosures presented in the other financial statement notes, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Management views critical accounting policies to be those which are highly dependent on subjective or complex judgments, estimates and assumptions, and where changes inthose estimates and assumptions could have a significant impact on the financial statements. Management currently views the adequacy of the allowance for loan losses to be a critical accounting policy.

The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management's judgment, should be charged off.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans generally consist of loans with balances of $200 or more on nonaccrual status or nonperforming in nature. Loans for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and reasons for the delay, the borrower's prior payment record, and the amount of shortfall in relation to the principal and interest owed.

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Commercial and commercial real estate loans are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Smaller balance homogeneous loans, such as consumer and most residential real estate, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosure. Troubled debt restructurings are measured at the present value of estimated future cash flows using the loan's effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component covers non-impaired loans and impaired loans that are not individually reviewed for impairment and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent 3 years for the consumer and real estate portfolio segment and 5 years for the commercial portfolio segment. The total loan portfolio's actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The following portfolio segments have been identified: Commercial Real Estate, Commercial and Industrial, Residential Real Estate, and Consumer.

Commercial and industrial loans consist of borrowings for commercial purposes by individuals, corporations, partnerships, sole proprietorships, and other business enterprises. Commercial and industrial loans are generally secured by business assets such as equipment, accounts receivable, inventory, or any other asset excluding real estate and generally made to finance capital expenditures or operations. The Company's risk exposure is related to deterioration in the value of collateral securing the loan should foreclosure become necessary. Generally, business assets used or produced in operations do not maintain their value upon foreclosure, which may require the Company to write down the value significantly to sell.

Commercial real estate consists of nonfarm, nonresidential loans secured by owner-occupied and nonowner-occupied commercial real estate as well as commercial construction loans. An owner-occupied loan relates to a borrower purchased building or space for which the repayment of principal is dependent upon cash flows from the ongoing business operations conducted by the party, or an affiliate of the party, who owns the property. Owner-occupied loans that are dependent on cash flows from operations can be adversely affected by current market conditions for their product or service. A nonowner-occupied loan is a property loan for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the property. Nonowner-occupied loans that are dependent upon rental income are primarily impacted by local economic conditions which dictate occupancy rates and the amount of rent charged. Commercial construction loans consist of borrowings to purchase and develop raw land into one- to four-family residential properties. Construction loans are extended to individuals as well as corporations for the construction of an individual or multiple properties and are secured by raw land and the subsequent improvements. Repayment of the loans to real estate developers is dependent upon the sale of properties to third parties in a timely fashion upon completion. Should there be delays in construction or a downturn in the market for those properties, there may be significant erosion in value which may be absorbed by the Company.

Residential real estate loans consist of loans to individuals for the purchase of one- to four-family primary residences with repayment primarily through wage or other income sources of the individual borrower. The Company's loss exposure to these loans is dependent on local market conditions for residential properties as loan amounts are determined, in part, by the fair value of the property at origination.

Consumer loans are comprised of loans to individuals secured by automobiles, open-end home equity loans and other loans to individuals for household, family, and other personal expenditures, both secured and unsecured. These loans typically have maturities of 6 years or less with repayment dependent on individual wages and income. The risk of loss on consumer loans is elevated as the collateral securing these loans, if any, rapidly depreciate in value or may be worthless and/or difficult to locate if repossession is necessary. During the last several years, one of the most significant portions of the Company's net loan charge-offs have been from consumer loans. Nevertheless, the Company has allocated the highest percentage of its allowance for loan losses as a percentage of loans to the other identified loan portfolio segments due to the larger dollar balances associated with such portfolios.

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Concentration of Credit Risk

The Company maintains a diversified credit portfolio, with residential real estate loans currently comprising the most significant portion. Credit risk is primarily subject to loans made to businesses and individuals in southeastern Ohio and western West Virginia. Management believes this risk to be general in nature, as there are no material concentrations of loans to any industry or consumer group. To the extent possible, the Company diversifies its loan portfolio to limit credit risk by avoiding industry concentrations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's goal for interest rate sensitivity management is to maintain a balance between steady net interest income growth and the risks associated with interest rate fluctuations.  Interest rate risk ("IRR") is the exposure of the Company's financial condition to adverse movements in interest rates.  Accepting this risk can be an important source of profitability, but excessive levels of IRR can threaten the Company's earnings and capital.

The Company evaluates IRR through the use of an earnings simulation model to analyze net interest income sensitivity to changing interest rates.  The modeling process starts with a base case simulation, which assumes a static balance sheet and flat interest rates.  The base case scenario is compared to rising and falling interest rate scenarios assuming a parallel shift in all interest rates.  Comparisons of net interest income and net income fluctuations from the flat rate scenario illustrate the risks associated with the current balance sheet structure.

The Company's Asset/Liability Committee monitors and manages IRR within Board approved policy limits.  The current IRR policy limits anticipated changes in net interest income to an instantaneous increase or decrease in market interest rates over a 12 month horizon to +/- 5% for a 100 basis point rate shock, +/- 7.5% for a 200 basis point rate shock and +/- 10% for a 300 basis point rate shock.  Based on the level of interest rates, management did not test interest rates down 200 or 300 basis points.

The following table presents the Company's estimated net interest income sensitivity:

Change in Interest Rates         in Basis Points	June 30, 2016 Percentage Change in   Net Interest Income	December 31, 2015 Percentage Change in   Net Interest Income
+300	.44%	(.03%)
+200	.49%	.18%
+100	.36%	.19%
-100	(2.51%)	(2.48%)

The estimated percentage change in net interest income due to a change in interest rates was within the policy guidelines established by the Board.  With the historical low interest rate environment, management generally has been focused on limiting the duration of assets, while trying to extend the duration of our funding sources to the extent customer preferences will permit the Company to do so.  At June 30, 2016, the interest rate risk profile reflects an asset sensitive position, which produces higher net interest income due to an increase in interest rates.  This is a modest increase in asset sensitivity from the position at year end.  Contributing to the change in interest rate risk profile, was the increase in liquidity due to tax refund processing.  The additional liquidity is maintained in an interest-bearing account at the Federal Reserve and the interest rate is highly correlated to any rate change implemented by the Federal Reserve as part of its monetary policy.  Since the deposit balance associated with tax refund processing is seasonal, management expects a portion of the balance maintained at the Federal Reserve to decline in subsequent quarters, which may reduce or eliminate our asset sensitive position.  In a declining rate environment, net interest income is impacted by the interest rate on many deposit accounts not being able to adjust downward.  With interest rates so low, deposit accounts are perceived to be at or near an interest rate floor.  As a result, net interest income decreases in a declining interest rate environment.  Overall, management is comfortable with the current interest rate risk profile which reflects minimal exposure to interest rate changes.

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ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

With the participation of the Chief Executive Officer (the principal executive officer) and the Vice President and Chief Financial Officer (the principal financial officer) of Ohio Valley, Ohio Valley's management has evaluated the effectiveness of Ohio Valley's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the quarterly period covered by this Quarterly Report on Form 10‑Q.  Based on that evaluation, Ohio Valley's Chief Executive Officer and Vice President and Chief Financial Officer have concluded that Ohio Valley's disclosure controls and procedures are effective as of the end of the quarterly period covered by this Quarterly Report on Form 10‑Q to ensure that information required to be disclosed by Ohio Valley in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by Ohio Valley in the reports that it files or submits under the Exchange Act is accumulated and communicated to Ohio Valley's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in Ohio Valley's internal control over financial reporting (as defined in Rule 13a‑15(f) under the Exchange Act) that occurred during Ohio Valley's fiscal quarter ended June 30, 2016, that has materially affected, or is reasonably likely to materially affect, Ohio Valley's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Not applicable.

ITEM 1A.  RISK FACTORS

The Company could experience difficulties in managing its growth and effectively integrating the operations of Milton Bancorp and Milton Bank.

The Company's earnings, financial condition and prospects will depend in part on the Company's ability to integrate successfully the operations of Milton Bancorp and Milton Bank and to continue to implement its own business plan following the merger.  The Company may not be able to achieve fully the strategic objectives and projected operating efficiencies in the merger.  The costs or difficulties relating to the integration of Milton Bancorp and Milton Bank with the Company's organization may be greater than expected or the cost savings from any anticipated economies of scale of the combined organization may be lower or take longer to realize than expected.  Inherent uncertainties exist in integrating the operations of any acquired entity, and the Company may encounter difficulties, including, without limitation, loss of key employees and customers, the disruption of its ongoing business or possible inconsistencies in standards, controls, procedures and policies.  These factors could contribute to the Company not fully achieving the expected benefits from the merger.

The United Kingdom's exit from the European Union could adversely affect our business.

On June 23, 2016, a vote held in the United Kingdom resulted in a determination that the United Kingdom should exit the European Union.  An exit from the European Union is unprecedented.  The details of the exit and how it will affect the United Kingdom, the remainder of the European Union and the various elements of the United States economy, including the Bank and its customers, are unknown.  The uncertainty surrounding the terms of the United Kingdom's exit and its consequences could adversely impact customer and investor confidence and therefore demand for the Company's products and services; result in additional market volatility, changes in interest rates and changes in investment values; and adversely affect the Bank's business, results of operations and financial condition.

38

In addition to the risk factors described above, you should carefully consider the other risk factors discussed in Part I, "Item 1A. Risk Factors" in Ohio Valley's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on March 15, 2016 and available at www.sec.gov.  These risk factors could materially affect the Company's business, financial condition or future results.  The risk factors described in the Annual Report on Form 10-K are not the only risks facing the Company.  Additional risks and uncertainties not currently known to the Company or that management currently deems to be immaterial also may materially adversely affect the Company's business, financial condition and/or operating results.  Moreover, the Company undertakes no obligation and disclaims any intention to publish revised information or updates to forward looking statements contained in such risk factors or in any other statement made at any time by any director, officer, employee or other representative of the Company unless and until any such revisions or updates are expressly required to be disclosed by applicable securities laws or regulations.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Ohio Valley did not purchase any of its shares during the three months ended June 30, 2016.

Ohio Valley did not sell any unregistered equity securities during the three months ended June 30, 2016.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.  OTHER INFORMATION

Not applicable.

ITEM 6.  EXHIBITS

(a)  Exhibits:

Reference is made to the Exhibit Index set forth immediately following the signature page of this Form 10-Q.

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			OHIO VALLEY BANC CORP.
Date:	August 9, 2016	By:	/s/Thomas E. Wiseman
			Thomas E. Wiseman
			President and Chief Executive Officer
Date:	August 9, 2016	By:	/s/Scott W. Shockey
			Scott W. Shockey
			Senior Vice President and Chief Financial Officer

40

EXHIBIT INDEX

The following exhibits are included in this Form 10-Q or are incorporated by reference as noted in the following table:

Exhibit Number	Exhibit Description
2(a)	Agreement and Plan of Merger between Ohio Valley Banc Corp. and Milton Bancorp, Inc., dated January 7, 2016: Incorporated herein by reference to Exhibit 2.1 to Ohio Valley's Current Report on Form 8-K filed on January 7, 2016 (SEC File No. 0-20914).
2(b)	Amendment to Agreement and Plan of Merger by and between Ohio Valley Banc Corp. and Milton Bancorp, Inc., effective April 20, 2016: Incorporated herein by reference to Exhibit 2.1 to Ohio Valley's Current Report on Form 8-K filed on April 21, 2016 (SEC File No. 0-20914).
3(a)	Amended Articles of Incorporation of Ohio Valley (reflects amendments through April 7, 1999) [for SEC reporting compliance only - - not filed with the Ohio Secretary of State].  Incorporated herein by reference to Exhibit 3(a) to Ohio Valley's Annual Report on Form 10-K for fiscal  year ended December 31, 2007 (SEC File No. 0-20914).
3(b)	Code of Regulations of Ohio Valley (as amended by the shareholders on May 12, 2010): Incorporated herein by reference to Exhibit 3(b) to Ohio Valley's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010 (SEC File No. 0-20914).
4	Agreement to furnish instruments and agreements defining rights of holders of long-term debt: Filed herewith.
31.1	Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer):  Filed herewith.
31.2	Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer):  Filed herewith.
32	Section 1350 Certifications (Principal Executive Officer and Principal Accounting Officer): Filed herewith.
101.INS #	XBRL Instance Document: Filed herewith. #
101.SCH #	XBRL Taxonomy Extension Schema: Filed herewith. #
101.CAL #	XBRL Taxonomy Extension Calculation Linkbase: Filed herewith. #
101.DEF #	XBRL Taxonomy Extension Definition Linkbase: Filed herewith. #
101.LAB #	XBRL Taxonomy Extension Label Linkbase: Filed herewith. #
101.PRE #	XBRL Taxonomy Extension Presentation Linkbase: Filed herewith. #

# Attached as Exhibit 101 are the following documents formatted in XBRL (eXtensive Business Reporting Language): (i) Unaudited Consolidated Balance Sheets; (ii) Unaudited Condensed Consolidated Statements of Income; (iii) Unaudited Consolidated Statements of Comprehensive Income; (iv) Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity; (v) Unaudited Condensed Consolidated Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements.

41

EX-4

EXHIBIT 4

OHIO VALLEY BANC CORP.

420 Third Avenue

Gallipolis, OH  45631

(740) 446-2631

August 9, 2016

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE: Ohio Valley Banc Corp. – Form 10-Q for the six months ended June 30, 2016

Gentlemen:

Ohio Valley Banc Corp., an Ohio corporation ("Ohio Valley"), is today filing a Quarterly Report on Form 10-Q for the six months ended June 30, 2016 (the "Form 10-Q"), as executed on August 9, 2016.

Pursuant to the instructions relating to the Exhibits in Item 601(b)(4)(iii) of Regulation S-K, Ohio Valley hereby agrees to furnish the Commission, upon request, copies of instruments and agreements defining the rights of holders of its long-term debt and of the long-term debt of its consolidated subsidiaries, which are not being filed as exhibits to the Form 10-Q.  No such instrument or agreement represents long-term debt exceeding 10% of the total assets of Ohio Valley Banc Corp. and its subsidiaries on a consolidated basis.

Very truly yours,

/s/Thomas E. Wiseman 

Thomas E. Wiseman

President and Chief Executive Officer

Ohio Valley Banc Corp.

EX-31.1

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Thomas E. Wiseman, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Ohio Valley Banc Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2016	By:	/s/Thomas E. Wiseman
		Thomas E. Wiseman, President and CEO
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, Scott W. Shockey, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Ohio Valley Banc Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2016	By:	/s/Scott W. Shockey
		Scott W. Shockey, Senior Vice President and CFO
		(Principal Financial Officer)

EX-32

Exhibit 32

SECTION 1350 CERTIFICATION

In connection with the Quarterly Report of Ohio Valley Banc Corp. (the "Corporation") on Form 10‑Q for the quarterly period ended June 30, 2016 (the "Report"), the undersigned Thomas E. Wiseman, President and Chief Executive Officer of the Corporation, and Scott W. Shockey, Senior Vice President and Chief Financial Officer of the Corporation, each certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

*/s/Thomas E. Wiseman	*/s/Scott W. Shockey
Thomas E. Wiseman	Scott W. Shockey
President and Chief Executive Officer	Senior Vice President and Chief Financial Officer
Dated:  August 9, 2016	Dated:  August 9, 2016

* This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section.  This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Corporation specifically incorporates it by reference in any such filing.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 09, 2016
Document Information [Line Items]
Entity Registrant Name	OHIO VALLEY BANC CORP
Entity Central Index Key	0000894671
Trading Symbol	ovbc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		4,142,247
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
ASSETS
Cash and noninterest-bearing deposits with banks	$ 9,965	$ 9,475
Interest-bearing deposits with banks	47,502	36,055
Total cash and cash equivalents	57,467	45,530
Certificates of deposit in financial institutions	1,715	1,715
Securities available for sale	94,406	91,651
Securities held to maturity (estimated fair value: 2016 - $20,491; 2015 - $20,790)	19,310	19,903
Federal Home Loan Bank and Federal Reserve Bank stock	6,576	6,576
Total loans	602,936	585,752
Less: Allowance for loan losses	(6,934)	(6,648)
Net loans	596,002	579,104
Premises and equipment, net	10,348	10,404
Other real estate owned	2,046	2,358
Accrued interest receivable	1,853	1,819
Goodwill	1,267	1,267
Bank owned life insurance and annuity assets	28,752	28,352
Other assets	6,707	7,606
Total assets	826,449	796,285
LIABILITIES
Noninterest-bearing deposits	184,359	176,499
Interest-bearing deposits	493,956	484,247
Total deposits	678,315	660,746
Other borrowed funds	31,411	23,946
Subordinated debentures	8,500	8,500
Accrued liabilities	13,427	12,623
Total liabilities	731,653	705,815
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 5)
SHAREHOLDERS’ EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized; 2016 - 4,801,986 shares issued; 2015 - 4,777,414 shares issued)	4,802	4,777
Additional paid-in capital	35,867	35,318
Retained earnings	68,585	65,782
Accumulated other comprehensive income	1,254	305
Treasury stock, at cost (659,739 shares)	(15,712)	(15,712)
Total shareholders’ equity	94,796	90,470
Total liabilities and shareholders’ equity	$ 826,449	$ 796,285

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Securities held to maturity, fair value	$ 20,491	$ 20,790
Common stock, stated value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	4,801,986	4,777,414
Treasury stock, shares (in shares)	659,739	659,739

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Interest and dividend income:
Loans, including fees	$ 8,135,000	$ 8,150,000	$ 17,062,000	$ 17,049,000
Securities
Taxable	491,000	453,000	979,000	902,000
Tax exempt	112,000	134,000	226,000	273,000
Dividends	73,000	72,000	147,000	146,000
Other Interest	102,000	57,000	269,000	123,000
	8,913,000	8,866,000	18,683,000	18,493,000
Interest expense:
Deposits	510,000	555,000	1,008,000	1,090,000
Other borrowed funds	147,000	120,000	272,000	241,000
Subordinated debentures	50,000	42,000	97,000	83,000
	707,000	717,000	1,377,000	1,414,000
Net interest income	8,206,000	8,149,000	17,306,000	17,079,000
Provision for loan losses	141,000	799,000	620,000	721,000
Net interest income after provision for loan losses	8,065,000	7,350,000	16,686,000	16,358,000
Noninterest income:
Service charges on deposit accounts	434,000	393,000	839,000	746,000
Trust fees	56,000	57,000	116,000	115,000
Income from bank owned life insurance and annuity assets	191,000	138,000	400,000	314,000
Mortgage banking income	61,000	55,000	118,000	114,000
Electronic refund check / deposit fees	270,000	255,000	2,024,000	2,350,000
Debit / credit card interchange income	625,000	627,000	1,211,000	1,165,000
Gain (loss) on other real estate owned	13,000	45,000	8,000	60,000
Gain on sale of securities	0	135,000	0	135,000
Other	211,000	212,000	380,000	407,000
	1,861,000	1,917,000	5,096,000	5,406,000
Noninterest expense:
Salaries and employee benefits	4,528,000	4,426,000	9,098,000	8,826,000
Occupancy	405,000	388,000	834,000	790,000
Furniture and equipment	201,000	194,000	386,000	372,000
Professional fees	341,000	353,000	678,000	709,000
Marketing expense	248,000	234,000	495,000	469,000
FDIC insurance	148,000	132,000	297,000	298,000
Data processing	336,000	362,000	689,000	730,000
Software	302,000	262,000	594,000	509,000
Foreclosed assets	121,000	62,000	186,000	97,000
Merger related expenses	134,000		361,000
Other	1,009,000	1,141,000	2,124,000	2,181,000
	7,773,000	7,554,000	15,742,000	14,981,000
Income before income taxes	2,153,000	1,713,000	6,040,000	6,783,000
Provision for income taxes	447,000	303,000	1,502,000	1,749,000
NET INCOME	$ 1,706,000	$ 1,410,000	$ 4,538,000	$ 5,034,000
Earnings per share (in dollars per share)	$ 0.41	$ 0.34	$ 1.10	$ 1.22

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net Income	$ 1,706	$ 1,410	$ 4,538	$ 5,034
Other comprehensive income:
Change in unrealized gain on available for sale securities	499	(971)	1,437	(516)
Reclassification adjustment for realized (gains)		(135)		(135)
	499	(1,106)	1,437	(651)
Related tax (expense) benefit	(170)	376	(489)	222
Total other comprehensive income, net of tax	329	(730)	948	(429)
Total comprehensive income	$ 2,035	$ 680	$ 5,486	$ 4,605

XML

Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) $ in Thousands	USD ($) $ / shares
Balance at beginning of period at Dec. 31, 2014	$ 86,216
Net Income	5,034
Other comprehensive income, net of tax	(429)
Cash dividends	(1,936)
Balance at end of period at Jun. 30, 2015	$ 88,885
Cash dividends per share (in dollars per share) | $ / shares	$ 0.47
Balance at beginning of period at Mar. 31, 2015	$ 89,276
Net Income	1,410
Other comprehensive income, net of tax	(730)
Cash dividends	(1,071)
Balance at end of period at Jun. 30, 2015	$ 88,885
Cash dividends per share (in dollars per share) | $ / shares	$ 0.26
Balance at beginning of period at Dec. 31, 2015	$ 90,470
Net Income	4,538
Other comprehensive income, net of tax	948
Common stock issued to ESOP, 24,572 shares	575
Cash dividends	(1,735)
Balance at end of period at Jun. 30, 2016	$ 94,796
Cash dividends per share (in dollars per share) | $ / shares	$ 0.42
Balance at beginning of period at Mar. 31, 2016	$ 93,631
Net Income	1,706
Other comprehensive income, net of tax	329
Cash dividends	(870)
Balance at end of period at Jun. 30, 2016	$ 94,796
Cash dividends per share (in dollars per share) | $ / shares	$ 0.21

XML

Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parentheticals)	6 Months Ended
	Jun. 30, 2016 shares
Common stock issued to ESOP, shares (in shares)	24,572

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Net cash provided by operating activities:	$ 7,176	$ 4,760
Investing activities:
Proceeds from maturities of securities available for sale	8,805	7,783
Purchases of securities available for sale	(10,278)	(17,035)
Proceeds from maturities of securities held to maturity	981	1,501
Purchases of securities held to maturity	(412)	(625)
Proceeds from sale of available for sale securities		8,792
Net change in loans	(17,583)	(234)
Proceeds from sale of other real estate owned	386	487
Purchases of premises and equipment	(438)	(1,198)
Net cash (used in) investing activities	(18,539)	(529)
Financing activities:
Change in deposits	17,569	19,458
Cash dividends	(1,735)	(1,936)
Proceeds from Federal Home Loan Bank borrowings	8,203
Repayment of Federal Home Loan Bank borrowings	(715)	(650)
Change in other short-term borrowings	(22)
Net cash provided by financing activities	23,300	16,872
Change in cash and cash equivalents	11,937	21,103
Cash and cash equivalents at beginning of period	45,530	30,977
Cash and cash equivalents at end of period	57,467	52,080
Supplemental disclosure:
Cash paid for interest	1,330	1,352
Cash paid for income taxes	1,675	2,450
Transfers from loans to other real estate owned	65	492
Other real estate owned sales financed by the Bank	$ 274	$ 135

XML

Note 1 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

:

The accompanying consolidated financial statements include the accounts of Ohio Valley Banc Corp. (“Ohio Valley”) and its wholly-owned subsidiaries, The Ohio Valley Bank Company (the “Bank”), Loan Central, Inc. (“Loan Central”), a consumer finance company, Ohio Valley Financial Services Agency, LLC (“Ohio Valley Financial Services”), an insurance agency, and OVBC Captive, Inc. (“the Captive”), a limited purpose property and casualty insurance company. Ohio Valley and its subsidiaries are collectively referred to as the “Company”. All material intercompany accounts and transactions have been eliminated in consolidation.

These interim financial statements are prepared by the Company without audit and reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the consolidated financial position of the Company at June 30, 2016, and its results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2016 are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2016. The accompanying consolidated financial statements do not purport to contain all the necessary financial disclosures required by U.S. generally accepted accounting principles (“US GAAP”) that might otherwise be necessary in the circumstances. The Annual Report of the Company for the year ended December 31, 2015 contains consolidated financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.

The consolidated financial statements for 2015 have been reclassified to conform to the presentation for 2016. These reclassifications had no effect on the net results of operations or shareholders’ equity.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:

The accounting and reporting policies followed by the Company conform to US GAAP established by the Financial Accounting Standards Board (“FASB”). The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Areas involving the use of management’s estimates and assumptions that are more susceptible to change in the near term involve the allowance for loan losses, mortgage servicing rights, deferred tax assets, the fair value of certain securities, the fair value of financial instruments and the determination and carrying value of impaired loans and other real estate owned.

INDUSTRY SEGMENT INFORMATION:

Internal financial information is primarily reported and aggregated in two lines of business, banking and consumer finance.

EARNINGS PER SHARE

:

Earnings per share are computed based on net income divided by the weighted average number of common shares outstanding during the period. The weighted average common shares outstanding were 4,134,956 for the six months ended June 30, 2016 and 4,117,675 for the six months ended June 30, 2015. Ohio Valley had no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.

NEW ACCOUNTING PRONOUNCEMENTS:

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2018, with early adoption permitted on January 1, 2017. Management is currently evaluating the impact of the adoption of this guidance on the Company's financial statements.

In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”. The update provides updated accounting and reporting requirements for both public and non-public entities. The most significant provisions that will impact the Company are: 1) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement; 2) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet; 3) utilization of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and 4) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements. The update will be effective for interim and annual periods beginning after December 15, 2017, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption. Early adoption is not permitted.

Management is currently evaluating the impact of this update on its Consolidated Financial Statements.

In February 2016, the FASB issued an update (ASU 2016-02, Leases) which will require lessees to record most leases on their balance sheet and recognize leasing expenses in the income statement. Operating leases, except for short-term leases that are subject to an accounting policy election, will be recorded on the balance sheet for lessees by establishing a lease liability and corresponding right-of-use asset. The guidance in this ASU will become effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. Management is currently evaluating the impact of this update on its Consolidated Financial Statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses”. ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, for annual periods and interim periods within those annual periods, beginning after December 15, 2018. Management is currently evaluating the impact this update will have on the Company’s financial statements and results of operations.

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Note 2 - Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

Level 1:

Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2:

Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3:

Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following is a description of the Company’s valuation methodologies used to measure and disclose the fair values of its financial assets and liabilities on a recurring or nonrecurring basis:

Securities:

  The fair values for securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

Impaired Loans:

  At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Other Real Estate Owned:

  Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. 

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of management reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with management’s own assumptions of fair value based on factors that include recent market data or industry-wide statistics. On an as-needed basis, the Company reviews the fair value of collateral, taking into consideration current market data, as well as all selling costs that typically approximate 10%.

Assets

and Liabilities

Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements at June 30, 2016 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government sponsored entity securities		----	$	8,025		----
Agency mortgage-backed securities, residential		----		86,381		----

	Fair Value Measurements at December 31, 2015 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government sponsored entity securities		----	$	8,965		----
Agency mortgage-backed securities, residential		----		82,686		----

There were no transfers between Level 1 and Level 2 during 2016 or 2015.

Assets

and Liabilities

Measured on a Nonrecurring Basis

Assets and liabilities measured at fair value on a nonrecurring basis are summarized below:

	Fair Value Measurements at June 30, 2016, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial real estate:
Owner-occupied		----		----	$	3,318
Nonowner-occupied		----		----		2,148
Commercial and industrial		----		----		307
Other real estate owned:
Commercial real estate:
Construction		----		----		1,147

	Fair Value Measurements at December 31, 2015, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial real estate:
Nonowner-occupied		----		----	$	2,473
Commercial and industrial		----		----		3,779
Other real estate owned:
Commercial real estate:
Construction		----		----		1,147

At June 30, 2016, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled $7,835, with a corresponding valuation allowance of $2,062, resulting in an increase of $1,574 in provision expense during the three months ended June 30, 2016, and an increase of $1,658 during the six months ended June 30, 2016, with no additional charge-offs recognized. This is compared to a decrease of $19 in provision expense during the three months ended June 30, 2015, and a decrease of $13 in provision expense during the six months ended June 30, 2015, with $1,304 in additional charge-offs recognized. At December 31, 2015, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled $7,811, with a corresponding valuation allowance of $1,559, resulting in an increase of $741 in provision expense during the year ended December 31, 2015, with $1,422 in additional charge-offs recognized.

Other real estate owned that was measured at fair value less costs to sell at June 30, 2016 and December 31, 2015 had a net carrying amount of $1,147, which is made up of the outstanding balance of $2,217, net of a valuation allowance of $1,070 at December 31, 2015. There were no corresponding write downs during the three and six months ended June 30, 2016 and 2015.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2016 and December 31, 2015:

June 30, 2016	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range			(Weighted Average)
Impaired loans:
Commercial real estate:
Owner-occupied	$	3,318	Sales approach	Adjustment to comparables	5%	to	26%		9.7	%
			Cost approach	Adjustment to comparables	0%	to	29.5%		14.76	%
Nonowner-occupied		2,148	Sales approach	Adjustment to comparables	0%	to	12.5%		6.9	%
Commercial and industrial		307	Sales approach	Adjustment to comparables	0.9%	to	9.7%		5.2	%
Other real estate owned:
Commercial real estate:
Construction		1,147	Sales approach	Adjustment to comparables	0%	to	35%		15.2	%

December 31, 2015	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range			(Weighted Average)
Impaired loans:
Commercial real estate:
Nonowner-occupied	$	2,473	Sales approach	Adjustment to comparables	0%	to	12.5%		5.7	%
Commercial and industrial		3,779	Sales approach	Adjustment to comparables	0.9%	to	30%		14.3	%
Other real estate owned:
Commercial real estate:
Construction		1,147	Sales approach	Adjustment to comparables	0%	to	35%		15.2	%

The carrying amounts and estimated fair values of financial instruments at June 30, 2016 and December 31, 2015 are as follows:

			Fair Value Measurements at June 30, 2016 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	57,467	$	57,467	$	----	$	----	$	57,467
Certificates of deposit in financial institutions		1,715		----		1,715		----		1,715
Securities available for sale		94,406		----		94,406		----		94,406
Securities held to maturity		19,310		----		9,851		10,640		20,491
Federal Home Loan Bank and Federal Reserve Bank stock		6,576		N/A		N/A		N/A		N/A
Loans, net		596,002		----		----		601,895		601,895
Accrued interest receivable		1,853		----		218		1,635		1,853
Financial liabilities:
Deposits		678,315		184,359		494,500		----		678,859
Other borrowed funds		31,411		----		31,621		----		31,621
Subordinated debentures		8,500		----		5,563		----		5,563
Accrued interest payable		496		3		493		----		496

			Fair Value Measurements at December 31, 2015 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	45,530	$	45,530	$	----	$	----	$	45,530
Certificates of deposit in financial institutions		1,715		----		1,715		----		1,715
Securities available for sale		91,651		----		91,651		----		91,651
Securities held to maturity		19,903		----		9,814		10,976		20,790
Federal Home Loan Bank and Federal Reserve Bank stock		6,576		N/A		N/A		N/A		N/A
Loans, net		579,104		----		----		582,427		582,427
Accrued interest receivable		1,819		----		224		1,595		1,819
Financial liabilities:
Deposits		660,746		176,499		484,636		----		661,135
Other borrowed funds		23,946		----		23,672		----		23,672
Subordinated debentures		8,500		----		5,368		----		5,368
Accrued interest payable		449		4		445		----		449

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

Cash and Cash Equivalents

: The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

Certificates of

Deposit

in Financial Institutions

: The carrying amounts of certificates of deposit in financial institutions approximate fair values and are classified as Level 2.

Securities Held to Maturity:

  The fair values for securities held to maturity are determined in the same manner as securities held for sale and discussed earlier in this note.  Level 3 securities consist of nonrated municipal bonds and tax credit (“QZAB”) bonds.

Federal Home Loan Bank

and Federal Reserve Bank

stock

: It is not practical to determine the fair value of both Federal Home Loan Bank and Federal Reserve Bank stock due to restrictions placed on its transferability.

Loans

: Fair values of loans are estimated as follows:  The fair value of fixed rate loans is estimated by discounting future cash flows using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Deposit Liabilities

: The fair values disclosed for noninterest-bearing deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date resulting in a Level 2 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Other Borrowed Funds

: The carrying values of the Company’s short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification. The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Subordinated Debentures

: The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Accrued Interest Receivable and Payable

: The carrying amount of accrued interest approximates fair value

, resulting in a classification that is consistent with the earning assets and interest-bearing liabilities with which it is associated.

Off-balance Sheet Instruments

:  Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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Note 3 - Securities

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

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SECURITIES

The following table summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at June 30, 2016 and December 31, 2015 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses:

Securities Available for Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2016
U.S. Government sponsored entity securities	$	8,007	$	18	$	----		$	8,025
Agency mortgage-backed securities, residential		84,498		1,883		----			86,381
Total securities	$	92,505	$	1,901	$	----		$	94,406
December 31, 2015
U.S. Government sponsored entity securities	$	9,011	$	----	$	(46	)	$	8,965
Agency mortgage-backed securities, residential		82,178		981		(473	)		82,686
Total securities	$	91,189	$	981	$	(519	)	$	91,651

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value
June 30, 2016
Obligations of states and political subdivisions	$	19,305	$	1,181	$	----		$	20,486
Agency mortgage-backed securities, residential		5		----		----			5
Total securities	$	19,310	$	1,181	$	----		$	20,491
December 31, 2015
Obligations of states and political subdivisions	$	19,898	$	892	$	(5	)	$	20,785
Agency mortgage-backed securities, residential		5		----		----			5
Total securities	$	19,903	$	892	$	(5	)	$	20,790

The amortized cost and estimated fair value of debt securities at June 30, 2016, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay the debt obligations prior to their contractual maturities. Securities not due at a single maturity are shown separately.

	Available for Sale				Held to Maturity
Debt Securities:	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	4,002	$	4,007	$	141	$	144
Due in over one to five years		4,005		4,018		6,266		6,623
Due in over five to ten years		----		----		10,817		11,597
Due after ten years		----		----		2,081		2,122
Agency mortgage-backed securities, residential		84,498		86,381		5		5
Total debt securities	$	92,505	$	94,406	$	19,310	$	20,491

The following table summarizes securities with unrealized losses at June 30, 2016 and December 31, 2015, aggregated by major security type and length of time in a continuous unrealized loss position:

Less Than 12 Months

12 Months or More

Total

June 30, 2016

Fair Value

Unrealized Loss

Fair Value

Unrealized Loss

Fair Value

Unrealized Loss

Securities Available for Sale

U.S. Government sponsored entity securities

$

----

$

----

$

----

$

----

$

----

$

----

Agency mortgage-backed securities, residential

----

----

----

----

----

----

Total available for sale

$

----

$

----

$

----

$

----

$

----

$

----

	Less Than 12 Months					12 Months or More					Total
December 31, 2015	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Government sponsored entity securities	$	7,964	$	(46	)	$	----	$	----		$	7,964	$	(46	)
Agency mortgage-backed securities, residential		42,112		(407	)		3,645		(66	)		45,757		(473	)
Total available for sale	$	50,076	$	(453	)	$	3,645	$	(66	)	$	53,721	$	(519	)

	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrecognized Loss			Fair Value		Unrecognized Loss		Fair Value		Unrecognized Loss
Securities Held to Maturity
Obligations of states and political subdivisions	$	995	$	(5	)	$	----	$	----	$	995	$	(5	)
Total available for sale	$	995	$	(5	)	$	----	$	----	$	995	$	(5	)

There were no sales of investment securities during the three and six months ended June 30, 2016. During the three and six months ended June 30, 2015 the Company had proceeds of $8,792 pertaining to securities sales on available for sale securities with gross gains recognized of $135 for both periods. Unrealized losses on the Company’s debt securities have not been recognized into income because the issuers’ securities are of high credit quality as of June 30, 2016, and management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery.  Management does not believe any individual unrealized loss at June 30, 2016 and December 31, 2015 represents an other-than-temporary impairment.

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Note 4 - Loans and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

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LOANS

AND ALLOWANCE FOR LOAN LOSSES

Loans are comprised of the following:	June 30,		December 31,
	2016		2015
Residential real estate	$	225,731	$	223,875
Commercial real estate:
Owner-occupied		70,478		73,458
Nonowner-occupied		83,659		72,002
Construction		30,099		23,852
Commercial and industrial		83,365		81,936
Consumer:
Automobile		46,239		44,566
Home equity		19,712		20,841
Other		43,653		45,222
		602,936		585,752
Less: Allowance for loan losses		6,934		6,648
Loans, net	$	596,002	$	579,104

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended June 30, 2016 and 2015:

June 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,185		$	1,995		$	2,672		$	1,094		$	6,946
Provision for loan losses		(258	)		1,445			(1,266	)		220			141
Loans charged off		(67	)		(52	)		----			(353	)		(472	)
Recoveries		46			76			10			187			319
Total ending allowance balance	$	906		$	3,464		$	1,416		$	1,148		$	6,934

June 30, 2015	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,465		$	4,210		$	1,738		$	907		$	8,320
Provision for loan losses		(121	)		(64	)		478			506			799
Loans charged-off		(126	)		(1,366	)		(22	)		(446	)		(1,960	)
Recoveries		12			15			93			165			285
Total ending allowance balance	$	1,230		$	2,795		$	2,287		$	1,132		$	7,444

The following table presents the activity in the allowance for loan losses by portfolio segment for the six months ended

June 30, 2016 and 2015:

June 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,087		$	1,959		$	2,589		$	1,013		$	6,648
Provision for loan losses		(218	)		1,462			(1,184	)		560			620
Loans charged off		(171	)		(52	)		----			(836	)		(1,059	)
Recoveries		208			95			11			411			725
Total ending allowance balance	$	906		$	3,464		$	1,416		$	1,148		$	6,934

June 30, 2015	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,426		$	4,195		$	1,602		$	1,111		$	8,334
Provision for loan losses		(90	)		(58	)		492			377			721
Loans charged-off		(223	)		(1,374	)		(24	)		(707	)		(2,328	)
Recoveries		117			32			217			351			717
Total ending allowance balance	$	1,230		$	2,795		$	2,287		$	1,132		$	7,444

The following table presents the balance in the allowance for loan losses and the recorded investment of loans by portfolio segment and based on impairment method as of June 30, 2016 and December 31, 2015:

June 30, 2016	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	----	$	1,893	$	735	$	2	$	2,630
Collectively evaluated for impairment		906		1,571		681		1,146		4,304
Total ending allowance balance	$	906	$	3,464	$	1,416	$	1,148	$	6,934
Loans:
Loans individually evaluated for impairment	$	726	$	11,914	$	9,329	$	218	$	22,187
Loans collectively evaluated for impairment		225,005		172,322		74,036		109,386		580,749
Total ending loans balance	$	225,731	$	184,236	$	83,365	$	109,604	$	602,936

December 31, 2015	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	----	$	311	$	1,850	$	3	$	2,164
Collectively evaluated for impairment		1,087		1,648		739		1,010		4,484
Total ending allowance balance	$	1,087	$	1,959	$	2,589	$	1,013	$	6,648
Loans:
Loans individually evaluated for impairment	$	1,001	$	7,318	$	8,691	$	218	$	17,228
Loans collectively evaluated for impairment		222,874		161,994		73,245		110,411		568,524
Total ending loans balance	$	223,875	$	169,312	$	81,936	$	110,629	$	585,752

The following tables present information related to loans individually evaluated for impairment by class of loans as of

June 30, 2016 and December 31, 2015:

June 30, 2016	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	4,936	$	4,936	$	1,789
Nonowner-occupied		390		390		104
Commercial and industrial		887		887		735
Consumer:
Home equity		218		218		2
With no related allowance recorded:
Residential real estate		726		726		----
Commercial real estate:
Owner-occupied		3,691		3,144		----
Nonowner-occupied		5,659		3,262		----
Construction		280		182		----
Commercial and industrial		8,442		8,442		----
Total	$	25,229	$	22,187	$	2,630

December 31, 2015	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	204	$	204	$	204
Nonowner-occupied		396		396		107
Commercial and industrial		4,355		4,355		1,850
Consumer:
Home equity		218		218		3
With no related allowance recorded:
Residential real estate		1,001		1,001		----
Commercial real estate:
Owner-occupied		3,812		3,265		----
Nonowner-occupied		5,178		2,773		----
Construction		680		680		----
Commercial and industrial		4,336		4,336		----
Total	$	20,180	$	17,228	$	2,164

The following tables present information related to loans individually evaluated for impairment by class of loans for the three and six months ended June 30, 2016 and 2015:

	Three months ended June 30, 2016						Six months ended June 30, 2016
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	2,570	$	143	$	143	$	1,781	$	147	$	147
Nonowner-occupied		392		5		5		393		10		10
Commercial and industrial		887		----		----		887		----		----
Consumer:
Home equity		218		2		2		218		4		4
With no related allowance recorded:
Residential real estate		728		7		7		730		16		16
Commercial real estate:
Owner-occupied		3,197		40		40		3,220		83		83
Nonowner-occupied		3,378		29		29		3,176		42		42
Construction		431		97		97		514		97		97
Commercial and industrial		8,212		95		95		8,076		187		187
Total	$	20,013	$	418	$	418	$	18,995	$	586	$	586

	Three months ended June 30, 2015						Six months ended June 30, 2015
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	478	$	----	$	----	$	711	$	----	$	----
Nonowner-occupied		3,575		49		49		3,598		65		65
Commercial and industrial		3,185		40		40		2,909		65		65
Consumer:
Home equity		218		2		2		219		4		4
With no related allowance recorded:
Residential real estate		1,656		16		16		1,575		25		25
Commercial real estate:
Owner-occupied		2,570		30		30		2,573		60		60
Nonowner-occupied		3,630		13		13		3,857		25		25
Construction		680		----		----		453		----		----
Commercial and industrial		4,249		51		51		4,322		107		107
Total	$	20,241	$	201	$	201	$	20,217	$	351	$	351

The recorded investment of a loan is its carrying value excluding accrued interest and deferred loan fees.

Nonaccrual loans and loans past due 90 days or more and still accruing include both smaller balance homogenous loans that are collectively evaluated for impairment and individually classified as impaired loans.

The Company transfers loans to other real estate owned, at fair value less cost to sell, in the period the Company obtains physical possession of the property (through legal title or through a deed in lieu). As of June 30, 2016 and December 31, 2015, other real estate owned secured by residential real estate totaled $818 and $1,131, respectively. In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $1,099 and $988 as of June 30, 2016 and December 31, 2015, respectively.

The following table presents the recorded investment of nonaccrual loans and loans past due 90 days or more and still accruing by class of loans as of June 30, 2016 and December 31, 2015:

June 30, 2016	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	142	$	2,185
Commercial real estate:
Owner-occupied		135		394
Nonowner-occupied		----		2,402
Construction		----		182
Commercial and industrial		75		1,200
Consumer:
Automobile		56		16
Home equity		----		32
Other		46		----
Total	$	454	$	6,411

December 31, 2015	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	20	$	2,048
Commercial real estate:
Owner-occupied		----		404
Nonowner-occupied		----		2,737
Construction		----		769
Commercial and industrial		----		1,152
Consumer:
Automobile		18		27
Home equity		----		96
Other		1		3
Total	$	39	$	7,236

The following table presents the aging of the recorded investment of past due loans by class of loans as of June 30, 2016 and December 31, 2015:

June 30, 2016	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	3,477	$	1,319	$	1,742	$	6,538	$	219,193	$	225,731
Commercial real estate:
Owner-occupied		348		1,305		396		2,049		68,429		70,478
Nonowner-occupied		34		48		2,402		2,484		81,175		83,659
Construction		355		----		182		537		29,562		30,099
Commercial and industrial		115		25		1,221		1,361		82,004		83,365
Consumer:
Automobile		789		152		68		1,009		45,230		46,239
Home equity		74		70		16		160		19,552		19,712
Other		568		264		46		878		42,775		43,653
Total	$	5,760	$	3,183	$	6,073	$	15,016	$	587,920	$	602,936

December 31, 2015	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	2,564	$	1,484	$	1,708	$	5,756	$	218,119	$	223,875
Commercial real estate:
Owner-occupied		141		33		371		545		72,913		73,458
Nonowner-occupied		35		334		2,737		3,106		68,896		72,002
Construction		----		2		769		771		23,081		23,852
Commercial and industrial		31		88		1,077		1,196		80,740		81,936
Consumer:
Automobile		727		197		36		960		43,606		44,566
Home equity		75		----		76		151		20,690		20,841
Other		420		104		4		528		44,694		45,222
Total	$	3,993	$	2,242	$	6,778	$	13,013	$	572,739	$	585,752

Troubled Debt Restructurings:

A troubled debt restructuring (“TDR”) occurs when the Company has agreed to a loan modification in the form of a concession for a borrower who is experiencing financial difficulty.  All TDR’s are considered to be impaired.   The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a reduction in the contractual principal and interest payments of the loan; or short-term interest-only payment terms.

The Company has allocated reserves for a portion of its TDR’s to reflect the fair values of the underlying collateral or the present value of the concessionary terms granted to the customer.

The following table presents the types of TDR loan modifications by class of loans as of June 30, 2016 and December 31, 2015:

June 30, 2016	TDR’s Performing to Modified Terms		TDR’s Not Performing to Modified Terms		Total TDR’s
Residential real estate
Interest only payments	$	726	$	----	$	726
Commercial real estate:
Owner-occupied
Interest only payments		389		----		389
Rate reduction		----		232		232
Reduction of principal and interest payments		592		----		592
Maturity extension at lower stated rate than market rate		1,932		----		1,932
Credit extension at lower stated rate than market rate		204		----		204
Nonowner-occupied
Interest only payments		539		2,148		2,687
Rate reduction		390		----		390
Credit extension at lower stated rate than market rate		575		----		575
Commercial and industrial
Interest only payments		7,462		----		7,462
Credit extension at lower stated rate than market rate		980		391		1,371
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		218		----		218
Total TDR’s	$	14,007	$	2,771	$	16,778

December 31, 2015	TDR’s Performing to Modified Terms		TDR’s Not Performing to Modified Terms		Total TDR’s
Residential real estate
Interest only payments	$	1,001	$	----	$	1,001
Commercial real estate:
Owner-occupied
Interest only payments		433		----		433
Rate reduction		----		232		232
Reduction of principal and interest payments		604		----		604
Maturity extension at lower stated rate than market rate		1,996		----		1,996
Credit extension at lower stated rate than market rate		204		----		204
Nonowner-occupied
Interest only payments		300		2,473		2,773
Rate reduction		396		----		396
Commercial and industrial
Interest only payments		7,579		----		7,579
Credit extension at lower stated rate than market rate		226		391		617
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		218		----		218
Total TDR’s	$	12,957	$	3,096	$	16,053

During the three and six months ended June 30, 2016, the TDR's described above decreased the provision expense and the allowance for loan losses by $1,167 and  $1,119, respectively, with no corresponding charge-offs. This is compared to a $47 decrease and a $68 increase in the provision expense and the allowance for loan losses during the three and six months ended June 30, 2015, respectively, with a corresponding charge-off of $1,304. During the year ended December 31, 2015, the TDR's described above increased the allowance for loan losses and provision expense by $93 with corresponding charge-offs of $1,422. The charge-offs of $1,422 during 2015 included $1,304 that were related to specific reserves that had already been provided for during 2014, and, as a result, did not impact provision expense during 2015.

At June 30, 2016, the balance in TDR loans increased $725, or 4.5%, from year-end 2015. The increase was largely due to concessions granted on two commercial real estate nonowner-occupied loans during the first quarter of 2016. The Company had 83% of its TDR's performing according to their modified terms at June 30, 2016, as compared to 81% at December 31, 2015. The Company's specific allocations in reserves to customers whose loan terms have been modified in TDR’s totaled $550 at June 30, 2016, as compared to $1,669 in reserves at December 31, 2015. At June 30, 2016, the Company had $864 in commitments to lend additional amounts to customers with outstanding loans that are classified as TDR’s, as compared to $995 at December 31, 2015.

There were no TDR loan modifications during the three months ended June 30, 2016. The following table presents the pre- and post-modification balances of TDR loan modifications by class of loans that occurred during the three months ended June 30, 2015:

	TDR’s Performing to Modified Terms				TDR’s Not Performing to Modified Terms
Three months ended June 30, 2015	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Residential real estate:
Interest only payments	$	495	$	495	$	----	$	----
Total TDR’s	$	495	$	495	$	----	$	----

The following table presents the pre- and post-modification balances of TDR loan modifications by class of loans that occurred during the six months ended June 30, 2016 and 2015:

	TDR’s Performing to Modified Terms				TDR’s Not Performing to Modified Terms
Six months ended June 30, 2016	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial real estate:
Nonowner-occupied
Interest only payments	$	238	$	238	$	----	$	----
Credit extension at lower stated rate than market rate		575		575		----		----
Total TDR’s	$	813	$	813	$	----	$	----

	TDR’s Performing to Modified Terms				TDR’s Not Performing to Modified Terms
Six months ended June 30, 2015	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Residential real estate:
Interest only payments	$	495	$	495	$	----	$	----
Total TDR’s	$	495	$	495	$	----	$	----

All of the Company’s loans that were restructured during the six months ended June 30, 2016 and 2015 were performing in accordance with their modified terms. Furthermore, there were no TDR’s described above at June 30, 2016 and 2015 that experienced any payment defaults within twelve months following their loan modification. A default is considered to have occurred once the TDR is past due 90 days or more or it has been placed on nonaccrual. TDR loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The loans modified during the six months ended June 30, 2016 had no impact on the provision expense or the allowance for loan losses. As of June 30, 2016, the Company had no allocation of reserves to customers whose loan terms were modified during the first six months of 2016. The loans modified during the six months ended June 30, 2015 had no impact on the provision expense or the allowance for loan losses. As of June 30, 2015, the Company had no allocation of reserves to customers whose loan terms were modified during the first six months of 2015.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. These risk categories are represented by a loan grading scale from 1 through 10. The Company analyzes loans individually with a higher credit risk rating and groups these loans into categories called “criticized” and ”classified” assets. The Company considers its criticized assets to be loans that are graded 8 and its classified assets to be loans that are graded 9 through 10. The Company’s risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed $500.

The Company uses the following definitions for its criticized loan risk ratings:

Special Mention (Loan Grade 8).

Loans classified as special mention indicate considerable risk due to deterioration of repayment (in the earliest stages) due to potential weak primary repayment source, or payment delinquency.  These loans will be under constant supervision, are not classified and do not expose the institution to sufficient risks to warrant classification.  These deficiencies should be correctable within the normal course of business, although significant changes in company structure or policy may be necessary to correct the deficiencies.  These loans are considered bankable assets with no apparent loss of principal or interest envisioned.  The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted.  Credits that are defined as a troubled debt restructuring should be graded no higher than special mention until they have been reported as performing over one year after restructuring.

The Company uses the following definitions for its classified loan risk ratings:

Substandard (Loan Grade 9).

  Loans classified as substandard represent very high risk, serious delinquency, nonaccrual, or unacceptable credit. Repayment through the primary source of repayment is in jeopardy due to the existence of one or more well defined weaknesses and the collateral pledged may inadequately protect collection of the loans. Loss of principal is not likely if weaknesses are corrected, although financial statements normally reveal significant weakness. Loans are still considered collectible, although loss of principal is more likely than with special mention loan grade 8 loans. Collateral liquidation considered likely to satisfy debt.

Doubtful (Loan Grade 10).

  Loans classified as doubtful display a high probability of loss, although the amount of actual loss at the time of classification is undetermined. This should be a temporary category until such time that actual loss can be identified, or improvements made to reduce the seriousness of the classification. These loans exhibit all substandard characteristics with the addition that weaknesses make collection or liquidation in full highly questionable and improbable. This classification consists of loans where the possibility of loss is high after collateral liquidation based upon existing facts, market conditions, and value. Loss is deferred until certain important and reasonable specific pending factors which may strengthen the credit can be more accurately determined. These factors may include proposed acquisitions, liquidation procedures, capital injection, receipt of additional collateral, mergers, or refinancing plans. A doubtful classification for an entire credit should be avoided when collection of a specific portion appears highly probable with the adequately secured portion graded substandard.

Criticized and classified loans will mostly consist of commercial and industrial and commercial real estate loans. The Company considers its loans that do not meet the criteria for a criticized and classified asset rating as pass rated loans, which will include loans graded from 1 (Prime) to 7 (Watch). All commercial loans are categorized into a risk category either at the time of origination or reevaluation date. As of June 30, 2016 and December 31, 2015, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

June 30, 2016	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	61,875	$	369	$	8,234	$	70,478
Nonowner-occupied		74,319		1,717		7,623		83,659
Construction		29,554		----		545		30,099
Commercial and industrial		79,906		----		3,459		83,365
Total	$	245,654	$	2,086	$	19,861	$	267,601

December 31, 2015	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	62,287	$	6,738	$	4,433	$	73,458
Nonowner-occupied		61,577		6,305		4,120		72,002
Construction		23,080		----		772		23,852
Commercial and industrial		70,852		5,232		5,852		81,936
Total	$	217,796	$	18,275	$	15,177	$	251,248

The Company also obtains the credit scores of its borrowers upon origination (if available by the credit bureau), but the scores are not updated. The Company focuses mostly on the performance and repayment ability of the borrower as an indicator of credit risk and does not consider a borrower's credit score to be a significant influence in the determination of a loan's credit risk grading.

For residential and consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment of residential and consumer loans by class of loans based on repayment activity as of June 30, 2016 and December 31, 2015:

June 30, 2016	Consumer
	Automobile		Home Equity		Other		Residential Real Estate		Total
Performing	$	46,167	$	19,680	$	43,607	$	223,404	$	332,858
Nonperforming		72		32		46		2,327		2,477
Total	$	46,239	$	19,712	$	43,653	$	225,731	$	335,335

December 31, 2015	Consumer
	Automobile		Home Equity		Other		Residential Real Estate		Total
Performing	$	44,521	$	20,745	$	45,218	$	221,807	$	332,291
Nonperforming		45		96		4		2,068		2,213
Total	$	44,566	$	20,841	$	45,222	$	223,875	$	334,504

The Company, through its subsidiaries, originates residential, consumer, and commercial loans to customers located primarily in the southeastern areas of Ohio as well as the western counties of West Virginia. Approximately 5.53% of total loans were unsecured at June 30, 2016, down from 6.06% at December 31, 2015.

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Note 5 - Financial Instruments with Off-balance Sheet

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

NOTE

5

- FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual amount of those instruments. The contract amounts of these instruments are not included in the consolidated financial statements. At June 30, 2016, the contract amounts of these instruments totaled approximately $66,322, compared to $62,415 at December 31, 2015. The Bank uses the same credit policies in making commitments and conditional obligations as it does for instruments recorded on the balance sheet. Since many of these instruments are expected to expire without being drawn upon, the total contract amounts do not necessarily represent future cash requirements.

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Note 6 - Other Borrowed Funds

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Federal Home Loan Bank Advances, Disclosure [Text Block]

NOTE

6

- OTHER BORROWED FUNDS

Other borrowed funds at June 30, 2016 and December 31, 2015 are comprised of advances from the Federal Home Loan Bank (“FHLB”) of Cincinnati and promissory notes. At June 30, 2016 and December 31, 2015, FHLB Borrowings included $95 and $117 in capitalized lease obligations, respectively.

	FHLB Borrowings		Promissory Notes		Totals
June 30, 2016	$	27,493	$	3,918	$	31,411
December 31, 2015	$	20,028	$	3,918	$	23,946

Pursuant to collateral agreements with the FHLB, advances were secured by $217,358 in qualifying mortgage loans, $79,674 in commercial loans and $5,081 in FHLB stock at June 30, 2016. Fixed-rate FHLB advances of $27,398 mature through 2042 and have interest rates ranging from 1.34% to 3.31% and a year-to-date weighted average cost of 2.09%. There were no variable-rate FHLB borrowings at June 30, 2016.

At June 30, 2016, the Company had a cash management line of credit enabling it to borrow up to $75,000 from the FHLB. All cash management advances have an original maturity of 90 days. The line of credit must be renewed on an annual basis. There was $75,000 available on this line of credit at June 30, 2016.

Based on the Company's current FHLB stock ownership, total assets and pledgeable loans, the Company had the ability to obtain borrowings from the FHLB up to a maximum of $180,606 at June 30, 2016. Of this maximum borrowing capacity, the Company had $114,409 available to use as additional borrowings, of which $75,000 could be used for short-term, cash management advances, as mentioned above.

Promissory notes, issued primarily by Ohio Valley, are due at various dates through a final maturity date of May 16, 2018, and have fixed rates ranging from 1.25% to 1.50% and a year-to-date weighted average cost of 1.44% at June 30, 2016, as compared to 1.38% at December 31, 2015. Promissory notes payable by Ohio Valley to related parties totaled $360 at June 30, 2016.

Letters of credit issued on the Bank's behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $38,800 at June 30, 2016 and $34,800 at December 31, 2015.

Scheduled principal payments as of June 30, 2016:

	FHLB Borrowings		Promissory Notes		Totals
2016	$	1,331	$	1,904	$	3,235
2017		5,022		1,502		6,524
2018		1,967		512		2,479
2019		1,906		----		1,906
2020		1,817		----		1,817
Thereafter		15,450		----		15,450
	$	27,493	$	3,918	$	31,411

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Note 7 - Segment Information

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

7

– SEGMENT INFORMATION

The reportable segments are determined by the products and services offered, primarily distinguished between banking and consumer finance. They are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar. Loans, investments, and deposits provide the majority of the net revenues from the banking operation, while loans provide the majority of the net revenues for the consumer finance segment. All Company segments are domestic.

Total revenues from the banking segment, which accounted for the majority of the Company's total revenues, totaled 89.1% and 88.9% of total consolidated revenues for the quarters ended June 30, 2016 and 2015, respectively.

The accounting policies used for the Company's reportable segments are the same as those described in Note 1 - Summary of Significant Accounting Policies. Income taxes are allocated based on income before tax expense.

Information for the Company’s reportable segments is as follows:

	Three Months Ended June 30, 2016
	Banking		Consumer Finance		Total Company
Net interest income	$	7,617	$	589	$	8,206
Provision expense		130		11		141
Noninterest income		1,734		127		1,861
Noninterest expense		7,099		674		7,773
Tax expense		438		9		447
Net income		1,684		22		1,706
Assets		814,176		12,273		826,449

	Three Months Ended June 30, 2015
	Banking		Consumer Finance			Total Company
Net interest income	$	7,502	$	647		$	8,149
Provision expense		850		(51	)		799
Noninterest income		1,786		131			1,917
Noninterest expense		6,866		688			7,554
Tax expense		256		47			303
Net income		1,316		94			1,410
Assets		787,363		13,010			800,373

	Six Months Ended June 30, 2016
	Banking		Consumer Finance		Total Company
Net interest income	$	15,288	$	2,018	$	17,306
Provision expense		505		115		620
Noninterest income		4,566		530		5,096
Noninterest expense		14,293		1,449		15,742
Tax expense		1,169		333		1,502
Net income		3,887		651		4,538
Assets		814,176		12,273		826,449

	Six Months Ended June 30, 2015
	Banking		Consumer Finance		Total Company
Net interest income	$	15,063	$	2,016	$	17,079
Provision expense		675		46		721
Noninterest income		4,829		577		5,406
Noninterest expense		13,573		1,408		14,981
Tax expense		1,363		386		1,749
Net income		4,281		753		5,034
Assets		787,363		13,010		800,373

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Note 8 - Mergers and Acquisitions

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

NOTE 8 – MERGERS AND ACQUISITIONS

As of the close of business on August 5, 2016, Ohio Valley completed its merger with Milton Bancorp, Inc. (“Milton Bancorp”), pursuant to the terms of the Agreement and Plan of Merger dated as of January 7, 2016, by and between Ohio Valley and Milton Bancorp (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, Milton Bancorp was merged with and into Ohio Valley (the “Merger”). Immediately following the Merger, Milton Bancorp’s wholly-owned subsidiary, The Milton Banking Company, was merged with and into the Bank. As a result of the Merger and in accordance with the terms of the Merger Agreement, each Milton Bancorp share was converted into the right to receive either 1,636 Ohio Valley common shares, no par value, or cash in the amount of $37,219, subject to certain allocation procedures set forth in the Merger Agreement pursuant to which 80% of the 400 outstanding Milton Bancorp common shares were converted into the right to receive Ohio Valley common shares and the remaining 20% of the outstanding Milton Bancorp common shares were converted into the right to receive cash. After paying cash in lieu of fractional shares, Ohio Valley’s outstanding common shares increased by 523,518 shares as of August 5, 2016. Ohio Valley financed part of the cash portion of the purchase price through $5,000 in borrowed funds. After the Merger, the Company's assets totaled approximately $950 million and branches increased to 19 locations.

At the acquisition date, Milton had $113,320 in loans, $119,219 in deposits and no borrowings. We are currently working through the initial accounting for the acquisition which is not complete with respect to determination of fair value adjustments associated with acquired assets and assumed liabilities as well as valuation of intangible assets and goodwill.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

BASIS OF PRESENTATION

:

The accompanying consolidated financial statements include the accounts of Ohio Valley Banc Corp. (“Ohio Valley”) and its wholly-owned subsidiaries, The Ohio Valley Bank Company (the “Bank”), Loan Central, Inc. (“Loan Central”), a consumer finance company, Ohio Valley Financial Services Agency, LLC (“Ohio Valley Financial Services”), an insurance agency, and OVBC Captive, Inc. (“the Captive”), a limited purpose property and casualty insurance company. Ohio Valley and its subsidiaries are collectively referred to as the “Company”. All material intercompany accounts and transactions have been eliminated in consolidation.

These interim financial statements are prepared by the Company without audit and reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the consolidated financial position of the Company at June 30, 2016, and its results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2016 are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2016. The accompanying consolidated financial statements do not purport to contain all the necessary financial disclosures required by U.S. generally accepted accounting principles (“US GAAP”) that might otherwise be necessary in the circumstances. The Annual Report of the Company for the year ended December 31, 2015 contains consolidated financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.

The consolidated financial statements for 2015 have been reclassified to conform to the presentation for 2016. These reclassifications had no effect on the net results of operations or shareholders’ equity.

Use of Estimates, Policy [Policy Text Block]

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:

The accounting and reporting policies followed by the Company conform to US GAAP established by the Financial Accounting Standards Board (“FASB”). The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Areas involving the use of management’s estimates and assumptions that are more susceptible to change in the near term involve the allowance for loan losses, mortgage servicing rights, deferred tax assets, the fair value of certain securities, the fair value of financial instruments and the determination and carrying value of impaired loans and other real estate owned.

Segment Reporting, Policy [Policy Text Block]

INDUSTRY SEGMENT INFORMATION:

Internal financial information is primarily reported and aggregated in two lines of business, banking and consumer finance.

Earnings Per Share, Policy [Policy Text Block]

EARNINGS PER SHARE

:

Earnings per share are computed based on net income divided by the weighted average number of common shares outstanding during the period. The weighted average common shares outstanding were 4,134,956 for the six months ended June 30, 2016 and 4,117,675 for the six months ended June 30, 2015. Ohio Valley had no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.

New Accounting Pronouncements, Policy [Policy Text Block]

NEW ACCOUNTING PRONOUNCEMENTS:

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2018, with early adoption permitted on January 1, 2017. Management is currently evaluating the impact of the adoption of this guidance on the Company's financial statements.

In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”. The update provides updated accounting and reporting requirements for both public and non-public entities. The most significant provisions that will impact the Company are: 1) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement; 2) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet; 3) utilization of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and 4) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements. The update will be effective for interim and annual periods beginning after December 15, 2017, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption. Early adoption is not permitted.

Management is currently evaluating the impact of this update on its Consolidated Financial Statements.

In February 2016, the FASB issued an update (ASU 2016-02, Leases) which will require lessees to record most leases on their balance sheet and recognize leasing expenses in the income statement. Operating leases, except for short-term leases that are subject to an accounting policy election, will be recorded on the balance sheet for lessees by establishing a lease liability and corresponding right-of-use asset. The guidance in this ASU will become effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. Management is currently evaluating the impact of this update on its Consolidated Financial Statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses”. ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, for annual periods and interim periods within those annual periods, beginning after December 15, 2018. Management is currently evaluating the impact this update will have on the Company’s financial statements and results of operations.

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Note 2 - Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Table Text Block]

	Fair Value Measurements at June 30, 2016 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government sponsored entity securities		----	$	8,025		----
Agency mortgage-backed securities, residential		----		86,381		----

	Fair Value Measurements at December 31, 2015 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government sponsored entity securities		----	$	8,965		----
Agency mortgage-backed securities, residential		----		82,686		----

	Fair Value Measurements at June 30, 2016, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial real estate:
Owner-occupied		----		----	$	3,318
Nonowner-occupied		----		----		2,148
Commercial and industrial		----		----		307
Other real estate owned:
Commercial real estate:
Construction		----		----		1,147

	Fair Value Measurements at December 31, 2015, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial real estate:
Nonowner-occupied		----		----	$	2,473
Commercial and industrial		----		----		3,779
Other real estate owned:
Commercial real estate:
Construction		----		----		1,147

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

June 30, 2016	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range			(Weighted Average)
Impaired loans:
Commercial real estate:
Owner-occupied	$	3,318	Sales approach	Adjustment to comparables	5%	to	26%		9.7	%
			Cost approach	Adjustment to comparables	0%	to	29.5%		14.76	%
Nonowner-occupied		2,148	Sales approach	Adjustment to comparables	0%	to	12.5%		6.9	%
Commercial and industrial		307	Sales approach	Adjustment to comparables	0.9%	to	9.7%		5.2	%
Other real estate owned:
Commercial real estate:
Construction		1,147	Sales approach	Adjustment to comparables	0%	to	35%		15.2	%

December 31, 2015	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range			(Weighted Average)
Impaired loans:
Commercial real estate:
Nonowner-occupied	$	2,473	Sales approach	Adjustment to comparables	0%	to	12.5%		5.7	%
Commercial and industrial		3,779	Sales approach	Adjustment to comparables	0.9%	to	30%		14.3	%
Other real estate owned:
Commercial real estate:
Construction		1,147	Sales approach	Adjustment to comparables	0%	to	35%		15.2	%

Fair Value, by Balance Sheet Grouping [Table Text Block]

			Fair Value Measurements at June 30, 2016 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	57,467	$	57,467	$	----	$	----	$	57,467
Certificates of deposit in financial institutions		1,715		----		1,715		----		1,715
Securities available for sale		94,406		----		94,406		----		94,406
Securities held to maturity		19,310		----		9,851		10,640		20,491
Federal Home Loan Bank and Federal Reserve Bank stock		6,576		N/A		N/A		N/A		N/A
Loans, net		596,002		----		----		601,895		601,895
Accrued interest receivable		1,853		----		218		1,635		1,853
Financial liabilities:
Deposits		678,315		184,359		494,500		----		678,859
Other borrowed funds		31,411		----		31,621		----		31,621
Subordinated debentures		8,500		----		5,563		----		5,563
Accrued interest payable		496		3		493		----		496

			Fair Value Measurements at December 31, 2015 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	45,530	$	45,530	$	----	$	----	$	45,530
Certificates of deposit in financial institutions		1,715		----		1,715		----		1,715
Securities available for sale		91,651		----		91,651		----		91,651
Securities held to maturity		19,903		----		9,814		10,976		20,790
Federal Home Loan Bank and Federal Reserve Bank stock		6,576		N/A		N/A		N/A		N/A
Loans, net		579,104		----		----		582,427		582,427
Accrued interest receivable		1,819		----		224		1,595		1,819
Financial liabilities:
Deposits		660,746		176,499		484,636		----		661,135
Other borrowed funds		23,946		----		23,672		----		23,672
Subordinated debentures		8,500		----		5,368		----		5,368
Accrued interest payable		449		4		445		----		449

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Note 3 - Securities (Tables)

6 Months Ended

Jun. 30, 2016

Held-to-maturity Securities [Member]

Notes Tables

Schedule of Unrealized Loss on Investments [Table Text Block]

	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrecognized Loss			Fair Value		Unrecognized Loss		Fair Value		Unrecognized Loss
Securities Held to Maturity
Obligations of states and political subdivisions	$	995	$	(5	)	$	----	$	----	$	995	$	(5	)
Total available for sale	$	995	$	(5	)	$	----	$	----	$	995	$	(5	)

Available-for-sale Securities [Table Text Block]

Securities Available for Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2016
U.S. Government sponsored entity securities	$	8,007	$	18	$	----		$	8,025
Agency mortgage-backed securities, residential		84,498		1,883		----			86,381
Total securities	$	92,505	$	1,901	$	----		$	94,406
December 31, 2015
U.S. Government sponsored entity securities	$	9,011	$	----	$	(46	)	$	8,965
Agency mortgage-backed securities, residential		82,178		981		(473	)		82,686
Total securities	$	91,189	$	981	$	(519	)	$	91,651

Held-to-maturity Securities [Table Text Block]

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value
June 30, 2016
Obligations of states and political subdivisions	$	19,305	$	1,181	$	----		$	20,486
Agency mortgage-backed securities, residential		5		----		----			5
Total securities	$	19,310	$	1,181	$	----		$	20,491
December 31, 2015
Obligations of states and political subdivisions	$	19,898	$	892	$	(5	)	$	20,785
Agency mortgage-backed securities, residential		5		----		----			5
Total securities	$	19,903	$	892	$	(5	)	$	20,790

Investments Classified by Contractual Maturity Date [Table Text Block]

	Available for Sale				Held to Maturity
Debt Securities:	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	4,002	$	4,007	$	141	$	144
Due in over one to five years		4,005		4,018		6,266		6,623
Due in over five to ten years		----		----		10,817		11,597
Due after ten years		----		----		2,081		2,122
Agency mortgage-backed securities, residential		84,498		86,381		5		5
Total debt securities	$	92,505	$	94,406	$	19,310	$	20,491

Schedule of Unrealized Loss on Investments [Table Text Block]

Less Than 12 Months

12 Months or More

Total

June 30, 2016

Fair Value

Unrealized Loss

Fair Value

Unrealized Loss

Fair Value

Unrealized Loss

Securities Available for Sale

U.S. Government sponsored entity securities

$

----

$

----

$

----

$

----

$

----

$

----

Agency mortgage-backed securities, residential

----

----

----

----

----

----

Total available for sale

$

----

$

----

$

----

$

----

$

----

$

----

	Less Than 12 Months					12 Months or More					Total
December 31, 2015	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Government sponsored entity securities	$	7,964	$	(46	)	$	----	$	----		$	7,964	$	(46	)
Agency mortgage-backed securities, residential		42,112		(407	)		3,645		(66	)		45,757		(473	)
Total available for sale	$	50,076	$	(453	)	$	3,645	$	(66	)	$	53,721	$	(519	)

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Note 4 - Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Loans are comprised of the following:	June 30,		December 31,
	2016		2015
Residential real estate	$	225,731	$	223,875
Commercial real estate:
Owner-occupied		70,478		73,458
Nonowner-occupied		83,659		72,002
Construction		30,099		23,852
Commercial and industrial		83,365		81,936
Consumer:
Automobile		46,239		44,566
Home equity		19,712		20,841
Other		43,653		45,222
		602,936		585,752
Less: Allowance for loan losses		6,934		6,648
Loans, net	$	596,002	$	579,104

Schedule of Credit Losses Related to Financing Receivables, Current and Noncurrent [Table Text Block]

June 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,185		$	1,995		$	2,672		$	1,094		$	6,946
Provision for loan losses		(258	)		1,445			(1,266	)		220			141
Loans charged off		(67	)		(52	)		----			(353	)		(472	)
Recoveries		46			76			10			187			319
Total ending allowance balance	$	906		$	3,464		$	1,416		$	1,148		$	6,934

June 30, 2015	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,465		$	4,210		$	1,738		$	907		$	8,320
Provision for loan losses		(121	)		(64	)		478			506			799
Loans charged-off		(126	)		(1,366	)		(22	)		(446	)		(1,960	)
Recoveries		12			15			93			165			285
Total ending allowance balance	$	1,230		$	2,795		$	2,287		$	1,132		$	7,444

June 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,087		$	1,959		$	2,589		$	1,013		$	6,648
Provision for loan losses		(218	)		1,462			(1,184	)		560			620
Loans charged off		(171	)		(52	)		----			(836	)		(1,059	)
Recoveries		208			95			11			411			725
Total ending allowance balance	$	906		$	3,464		$	1,416		$	1,148		$	6,934

June 30, 2015	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,426		$	4,195		$	1,602		$	1,111		$	8,334
Provision for loan losses		(90	)		(58	)		492			377			721
Loans charged-off		(223	)		(1,374	)		(24	)		(707	)		(2,328	)
Recoveries		117			32			217			351			717
Total ending allowance balance	$	1,230		$	2,795		$	2,287		$	1,132		$	7,444

Allowance For Loan Losses And The Recorded Investment Of Loans [Table Text Block]

June 30, 2016	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	----	$	1,893	$	735	$	2	$	2,630
Collectively evaluated for impairment		906		1,571		681		1,146		4,304
Total ending allowance balance	$	906	$	3,464	$	1,416	$	1,148	$	6,934
Loans:
Loans individually evaluated for impairment	$	726	$	11,914	$	9,329	$	218	$	22,187
Loans collectively evaluated for impairment		225,005		172,322		74,036		109,386		580,749
Total ending loans balance	$	225,731	$	184,236	$	83,365	$	109,604	$	602,936

December 31, 2015	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	----	$	311	$	1,850	$	3	$	2,164
Collectively evaluated for impairment		1,087		1,648		739		1,010		4,484
Total ending allowance balance	$	1,087	$	1,959	$	2,589	$	1,013	$	6,648
Loans:
Loans individually evaluated for impairment	$	1,001	$	7,318	$	8,691	$	218	$	17,228
Loans collectively evaluated for impairment		222,874		161,994		73,245		110,411		568,524
Total ending loans balance	$	223,875	$	169,312	$	81,936	$	110,629	$	585,752

Schedule of Loans Individually Evaluated for Impairment [Table Text Block]

June 30, 2016	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	4,936	$	4,936	$	1,789
Nonowner-occupied		390		390		104
Commercial and industrial		887		887		735
Consumer:
Home equity		218		218		2
With no related allowance recorded:
Residential real estate		726		726		----
Commercial real estate:
Owner-occupied		3,691		3,144		----
Nonowner-occupied		5,659		3,262		----
Construction		280		182		----
Commercial and industrial		8,442		8,442		----
Total	$	25,229	$	22,187	$	2,630

December 31, 2015	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	204	$	204	$	204
Nonowner-occupied		396		396		107
Commercial and industrial		4,355		4,355		1,850
Consumer:
Home equity		218		218		3
With no related allowance recorded:
Residential real estate		1,001		1,001		----
Commercial real estate:
Owner-occupied		3,812		3,265		----
Nonowner-occupied		5,178		2,773		----
Construction		680		680		----
Commercial and industrial		4,336		4,336		----
Total	$	20,180	$	17,228	$	2,164

	Three months ended June 30, 2016						Six months ended June 30, 2016
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	2,570	$	143	$	143	$	1,781	$	147	$	147
Nonowner-occupied		392		5		5		393		10		10
Commercial and industrial		887		----		----		887		----		----
Consumer:
Home equity		218		2		2		218		4		4
With no related allowance recorded:
Residential real estate		728		7		7		730		16		16
Commercial real estate:
Owner-occupied		3,197		40		40		3,220		83		83
Nonowner-occupied		3,378		29		29		3,176		42		42
Construction		431		97		97		514		97		97
Commercial and industrial		8,212		95		95		8,076		187		187
Total	$	20,013	$	418	$	418	$	18,995	$	586	$	586

	Three months ended June 30, 2015						Six months ended June 30, 2015
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	478	$	----	$	----	$	711	$	----	$	----
Nonowner-occupied		3,575		49		49		3,598		65		65
Commercial and industrial		3,185		40		40		2,909		65		65
Consumer:
Home equity		218		2		2		219		4		4
With no related allowance recorded:
Residential real estate		1,656		16		16		1,575		25		25
Commercial real estate:
Owner-occupied		2,570		30		30		2,573		60		60
Nonowner-occupied		3,630		13		13		3,857		25		25
Construction		680		----		----		453		----		----
Commercial and industrial		4,249		51		51		4,322		107		107
Total	$	20,241	$	201	$	201	$	20,217	$	351	$	351

Schedule of Recorded Investment In Nonaccrual Loans [Table Text Block]

June 30, 2016	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	142	$	2,185
Commercial real estate:
Owner-occupied		135		394
Nonowner-occupied		----		2,402
Construction		----		182
Commercial and industrial		75		1,200
Consumer:
Automobile		56		16
Home equity		----		32
Other		46		----
Total	$	454	$	6,411

December 31, 2015	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	20	$	2,048
Commercial real estate:
Owner-occupied		----		404
Nonowner-occupied		----		2,737
Construction		----		769
Commercial and industrial		----		1,152
Consumer:
Automobile		18		27
Home equity		----		96
Other		1		3
Total	$	39	$	7,236

Past Due Financing Receivables [Table Text Block]

June 30, 2016	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	3,477	$	1,319	$	1,742	$	6,538	$	219,193	$	225,731
Commercial real estate:
Owner-occupied		348		1,305		396		2,049		68,429		70,478
Nonowner-occupied		34		48		2,402		2,484		81,175		83,659
Construction		355		----		182		537		29,562		30,099
Commercial and industrial		115		25		1,221		1,361		82,004		83,365
Consumer:
Automobile		789		152		68		1,009		45,230		46,239
Home equity		74		70		16		160		19,552		19,712
Other		568		264		46		878		42,775		43,653
Total	$	5,760	$	3,183	$	6,073	$	15,016	$	587,920	$	602,936

December 31, 2015	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	2,564	$	1,484	$	1,708	$	5,756	$	218,119	$	223,875
Commercial real estate:
Owner-occupied		141		33		371		545		72,913		73,458
Nonowner-occupied		35		334		2,737		3,106		68,896		72,002
Construction		----		2		769		771		23,081		23,852
Commercial and industrial		31		88		1,077		1,196		80,740		81,936
Consumer:
Automobile		727		197		36		960		43,606		44,566
Home equity		75		----		76		151		20,690		20,841
Other		420		104		4		528		44,694		45,222
Total	$	3,993	$	2,242	$	6,778	$	13,013	$	572,739	$	585,752

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

June 30, 2016	TDR’s Performing to Modified Terms		TDR’s Not Performing to Modified Terms		Total TDR’s
Residential real estate
Interest only payments	$	726	$	----	$	726
Commercial real estate:
Owner-occupied
Interest only payments		389		----		389
Rate reduction		----		232		232
Reduction of principal and interest payments		592		----		592
Maturity extension at lower stated rate than market rate		1,932		----		1,932
Credit extension at lower stated rate than market rate		204		----		204
Nonowner-occupied
Interest only payments		539		2,148		2,687
Rate reduction		390		----		390
Credit extension at lower stated rate than market rate		575		----		575
Commercial and industrial
Interest only payments		7,462		----		7,462
Credit extension at lower stated rate than market rate		980		391		1,371
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		218		----		218
Total TDR’s	$	14,007	$	2,771	$	16,778

December 31, 2015	TDR’s Performing to Modified Terms		TDR’s Not Performing to Modified Terms		Total TDR’s
Residential real estate
Interest only payments	$	1,001	$	----	$	1,001
Commercial real estate:
Owner-occupied
Interest only payments		433		----		433
Rate reduction		----		232		232
Reduction of principal and interest payments		604		----		604
Maturity extension at lower stated rate than market rate		1,996		----		1,996
Credit extension at lower stated rate than market rate		204		----		204
Nonowner-occupied
Interest only payments		300		2,473		2,773
Rate reduction		396		----		396
Commercial and industrial
Interest only payments		7,579		----		7,579
Credit extension at lower stated rate than market rate		226		391		617
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		218		----		218
Total TDR’s	$	12,957	$	3,096	$	16,053

Troubled Debt Restructurings on Financing Receivables Pre And Post Modification [Table Text Block]

	TDR’s Performing to Modified Terms				TDR’s Not Performing to Modified Terms
Three months ended June 30, 2015	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Residential real estate:
Interest only payments	$	495	$	495	$	----	$	----
Total TDR’s	$	495	$	495	$	----	$	----

	TDR’s Performing to Modified Terms				TDR’s Not Performing to Modified Terms
Six months ended June 30, 2016	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial real estate:
Nonowner-occupied
Interest only payments	$	238	$	238	$	----	$	----
Credit extension at lower stated rate than market rate		575		575		----		----
Total TDR’s	$	813	$	813	$	----	$	----

	TDR’s Performing to Modified Terms				TDR’s Not Performing to Modified Terms
Six months ended June 30, 2015	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Residential real estate:
Interest only payments	$	495	$	495	$	----	$	----
Total TDR’s	$	495	$	495	$	----	$	----

Financing Receivable Credit Quality Indicators [Table Text Block]

June 30, 2016	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	61,875	$	369	$	8,234	$	70,478
Nonowner-occupied		74,319		1,717		7,623		83,659
Construction		29,554		----		545		30,099
Commercial and industrial		79,906		----		3,459		83,365
Total	$	245,654	$	2,086	$	19,861	$	267,601

December 31, 2015	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	62,287	$	6,738	$	4,433	$	73,458
Nonowner-occupied		61,577		6,305		4,120		72,002
Construction		23,080		----		772		23,852
Commercial and industrial		70,852		5,232		5,852		81,936
Total	$	217,796	$	18,275	$	15,177	$	251,248

Performing and Nonperforming Loans [Table Text Block]

June 30, 2016	Consumer
	Automobile		Home Equity		Other		Residential Real Estate		Total
Performing	$	46,167	$	19,680	$	43,607	$	223,404	$	332,858
Nonperforming		72		32		46		2,327		2,477
Total	$	46,239	$	19,712	$	43,653	$	225,731	$	335,335

December 31, 2015	Consumer
	Automobile		Home Equity		Other		Residential Real Estate		Total
Performing	$	44,521	$	20,745	$	45,218	$	221,807	$	332,291
Nonperforming		45		96		4		2,068		2,213
Total	$	44,566	$	20,841	$	45,222	$	223,875	$	334,504

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Note 6 - Other Borrowed Funds (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Federal Home Loan Bank, Advances, by Branch of FHLB Bank [Table Text Block]

	FHLB Borrowings		Promissory Notes		Totals
June 30, 2016	$	27,493	$	3,918	$	31,411
December 31, 2015	$	20,028	$	3,918	$	23,946

Schedule of Maturities of Long-term Debt [Table Text Block]

	FHLB Borrowings		Promissory Notes		Totals
2016	$	1,331	$	1,904	$	3,235
2017		5,022		1,502		6,524
2018		1,967		512		2,479
2019		1,906		----		1,906
2020		1,817		----		1,817
Thereafter		15,450		----		15,450
	$	27,493	$	3,918	$	31,411

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Note 7 - Segment Information (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended June 30, 2016
	Banking		Consumer Finance		Total Company
Net interest income	$	7,617	$	589	$	8,206
Provision expense		130		11		141
Noninterest income		1,734		127		1,861
Noninterest expense		7,099		674		7,773
Tax expense		438		9		447
Net income		1,684		22		1,706
Assets		814,176		12,273		826,449

	Three Months Ended June 30, 2015
	Banking		Consumer Finance			Total Company
Net interest income	$	7,502	$	647		$	8,149
Provision expense		850		(51	)		799
Noninterest income		1,786		131			1,917
Noninterest expense		6,866		688			7,554
Tax expense		256		47			303
Net income		1,316		94			1,410
Assets		787,363		13,010			800,373

	Six Months Ended June 30, 2016
	Banking		Consumer Finance		Total Company
Net interest income	$	15,288	$	2,018	$	17,306
Provision expense		505		115		620
Noninterest income		4,566		530		5,096
Noninterest expense		14,293		1,449		15,742
Tax expense		1,169		333		1,502
Net income		3,887		651		4,538
Assets		814,176		12,273		826,449

	Six Months Ended June 30, 2015
	Banking		Consumer Finance		Total Company
Net interest income	$	15,063	$	2,016	$	17,079
Provision expense		675		46		721
Noninterest income		4,829		577		5,406
Noninterest expense		13,573		1,408		14,981
Tax expense		1,363		386		1,749
Net income		4,281		753		5,034
Assets		787,363		13,010		800,373

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Note 1 - Summary of Significant Accounting Policies (Details Textual)	6 Months Ended
	Jun. 30, 2016 shares	Jun. 30, 2015 shares
Number of Reportable Segments	2
Weighted Average Number of Shares Outstanding, Basic	4,134,956	4,117,675

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Note 2 - Fair Value of Financial Instruments (Details Textual) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Collateral Dependent Loans [Member]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	$ 7,835,000		$ 7,835,000		$ 7,811,000
Impaired Financing Receivable, Related Allowance	2,062,000		2,062,000		1,559,000
Provision for Loan Losses Expensed	1,574,000		1,658,000		741,000
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down			$ 0	$ 1,304,000	1,422,000
Provision Reversal for Loan Losses		$ 19,000		13,000
Selling Costs, Percentage			10.00%
Impaired Financing Receivable, Related Allowance	2,630,000		$ 2,630,000		2,164,000
Other Real Estate	$ 1,147,000		1,147,000		1,147,000
Other Real Estate, Gross					2,217,000
Real Estate Owned, Valuation Allowance					$ 1,070,000
SEC Schedule III, Real Estate, Write-down or Reserve, Amount			$ 0	$ 0

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Note 2 - Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Inputs, Level 2 [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Assets measured on a recurring basis	$ 8,025	$ 8,965
Fair Value, Inputs, Level 2 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Assets measured on a recurring basis	86,381	82,686
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Assets measured on a nonrecurring basis	2,148	2,473
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Commercial Portfolio Segment [Member]
Assets measured on a nonrecurring basis	307	3,779
Fair Value, Inputs, Level 3 [Member] | Other Real Estate Owned [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Assets measured on a nonrecurring basis	1,147	$ 1,147
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Assets measured on a nonrecurring basis	$ 3,318

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Note 2 - Level 3 Fair Value Measurements (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member] | Market Approach Valuation Technique [Member] | Minimum [Member]
Range	5.00%
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member] | Market Approach Valuation Technique [Member] | Maximum [Member]
Range	26.00%
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member] | Market Approach Valuation Technique [Member] | Weighted Average [Member]
Range	9.70%
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member] | Market Approach Valuation Technique [Member]
Fair Value	$ 3,318
Valuation Technique	Sales approach
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member] | Cost Approach Valuation Technique [Member] | Minimum [Member]
Range	0.00%
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member] | Cost Approach Valuation Technique [Member] | Maximum [Member]
Range	29.50%
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member] | Cost Approach Valuation Technique [Member] | Weighted Average [Member]
Range	14.76%
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member] | Cost Approach Valuation Technique [Member]
Valuation Technique	Cost approach
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Fair Value	$ 3,318
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member] | Market Approach Valuation Technique [Member] | Minimum [Member]
Range	0.00%	0.00%
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member] | Market Approach Valuation Technique [Member] | Maximum [Member]
Range	12.50%	12.50%
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member] | Market Approach Valuation Technique [Member] | Weighted Average [Member]
Range	6.90%	5.70%
Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member] | Market Approach Valuation Technique [Member]
Fair Value	$ 2,148	$ 2,473
Valuation Technique	Sales approach	Sales approach
Impaired Loans [Member] | Commercial and Industrial Portfolio Segment [Member] | Market Approach Valuation Technique [Member] | Minimum [Member]
Range	0.90%	0.90%
Impaired Loans [Member] | Commercial and Industrial Portfolio Segment [Member] | Market Approach Valuation Technique [Member] | Maximum [Member]
Range	9.70%	30.00%
Impaired Loans [Member] | Commercial and Industrial Portfolio Segment [Member] | Market Approach Valuation Technique [Member] | Weighted Average [Member]
Range	5.20%	14.30%
Impaired Loans [Member] | Commercial and Industrial Portfolio Segment [Member] | Market Approach Valuation Technique [Member]
Fair Value	$ 307	$ 3,779
Valuation Technique	Sales approach	Sales approach
Other Real Estate Owned [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Market Approach Valuation Technique [Member] | Minimum [Member]
Range	0.00%	0.00%
Other Real Estate Owned [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Market Approach Valuation Technique [Member] | Maximum [Member]
Range	35.00%	35.00%
Other Real Estate Owned [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Market Approach Valuation Technique [Member] | Weighted Average [Member]
Range	15.20%	15.20%
Other Real Estate Owned [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Market Approach Valuation Technique [Member]
Fair Value	$ 1,147	$ 1,147
Valuation Technique	Sales approach	Sales approach

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Note 2 - Fair Value Measurements (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Reported Value Measurement [Member]
Cash and cash equivalents	$ 57,467	$ 45,530
Certificates of deposit in financial institutions	1,715	1,715
Estimated fair value	94,406	91,651
Estimated fair value	19,310	19,903
Federal Home Loan Bank and Federal Reserve Bank stock	6,576	6,576
Loans, net	596,002	579,104
Accrued interest receivable	1,853	1,819
Deposits	678,315	660,746
Other borrowed funds	31,411	23,946
Subordinated debentures	8,500	8,500
Accrued interest payable	496	449
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Cash and cash equivalents	57,467	45,530
Certificates of deposit in financial institutions
Estimated fair value
Estimated fair value
Loans, net
Accrued interest receivable
Deposits	184,359	176,499
Other borrowed funds
Subordinated debentures
Accrued interest payable	3	4
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Cash and cash equivalents
Certificates of deposit in financial institutions	1,715	1,715
Estimated fair value	94,406	91,651
Estimated fair value	9,851	9,814
Loans, net
Accrued interest receivable	218	224
Deposits	494,500	484,636
Other borrowed funds	31,621	23,672
Subordinated debentures	5,563	5,368
Accrued interest payable	493	445
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Cash and cash equivalents
Certificates of deposit in financial institutions
Estimated fair value
Estimated fair value	10,640	10,976
Loans, net	601,895	582,427
Accrued interest receivable	1,635	1,595
Deposits
Other borrowed funds
Subordinated debentures
Accrued interest payable
Estimate of Fair Value Measurement [Member]
Cash and cash equivalents	57,467	45,530
Certificates of deposit in financial institutions	1,715	1,715
Estimated fair value	94,406	91,651
Estimated fair value	20,491	20,790
Loans, net	601,895	582,427
Accrued interest receivable	1,853	1,819
Deposits	678,859	661,135
Other borrowed funds	31,621	23,672
Subordinated debentures	5,563	5,368
Accrued interest payable	496	449
Estimated fair value	94,406	91,651
Estimated fair value	$ 20,491	$ 20,790

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Note 3 - Securities (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Gain (Loss) on Sale of Securities, Net	$ 0	$ 135,000	$ 0	$ 135,000
Proceeds from Sale of Available-for-sale Securities		8,792,000		8,792
Available-for-sale Securities, Gross Realized Gains		$ 135,000		$ 135

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Note 3 - Securities Available-for-Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
US Government-sponsored Enterprises Debt Securities [Member]
Amortized cost	$ 8,007	$ 9,011
Gross unrealized gains	18
Gross unrealized losses		(46)
Estimated fair value	8,025	8,965
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Amortized cost	84,498	82,178
Gross unrealized gains	1,883	981
Gross unrealized losses		(473)
Estimated fair value	86,381	82,686
Amortized cost	92,505	91,189
Gross unrealized gains	1,901	981
Gross unrealized losses		(519)
Estimated fair value	$ 94,406	$ 91,651

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Note 3 - Securities Held-to-Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
US States and Political Subdivisions Debt Securities [Member]
Amortized cost	$ 19,305	$ 19,898
Gross unrecognized gains	1,181	892
Gross unrecognized losses		(5)
Estimated fair value	20,486	20,785
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Amortized cost	5	5
Gross unrecognized gains
Gross unrecognized losses
Estimated fair value	5	5
Amortized cost	19,310	19,903
Gross unrecognized gains	1,181	892
Gross unrecognized losses		(5)
Estimated fair value	$ 20,491	$ 20,790

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Note 3 - Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Due in one year or less	$ 4,002
Due in one year or less	4,007
Due in one year or less	141
Due in one year or less	144
Due in over one to five years	4,005
Due in over one to five years	4,018
Due in over one to five years	6,266
Due in over one to five years	6,623
Due in over five to ten years	10,817
Due in over five to ten years	11,597
Due after ten years	2,081
Due after ten years	2,122
Agency mortgage-backed securities, residential	84,498
Agency mortgage-backed securities, residential	86,381
Agency mortgage-backed securities, residential	5
Agency mortgage-backed securities, residential	5
Total debt securities	92,505
Total debt securities	94,406
Total debt securities	19,310	$ 19,903
Estimated fair value	$ 20,491	$ 20,790

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Note 3 - Securities Available-for-Sale with Unrealized Losses (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
US Government-sponsored Enterprises Debt Securities [Member]
Less than 12 Months - Fair Value		$ 7,964
Less than 12 Months - Unrealized Loss		(46)
12 Months or More - Fair Value
12 Months or More - Unrealized Loss
Fair Value		7,964
Unrealized Loss		(46)
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Less than 12 Months - Fair Value		42,112
Less than 12 Months - Unrealized Loss		(407)
12 Months or More - Fair Value		3,645
12 Months or More - Unrealized Loss		(66)
Fair Value		45,757
Unrealized Loss		(473)
Less than 12 Months - Fair Value		50,076
Less than 12 Months - Unrealized Loss		(453)
12 Months or More - Fair Value		3,645
12 Months or More - Unrealized Loss		(66)
Fair Value		53,721
Unrealized Loss		$ (519)

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Note 3 - Securities Held to Maturity with Unrealized Losses (Details) $ in Thousands	Dec. 31, 2015 USD ($)
US States and Political Subdivisions Debt Securities [Member]
Less Than 12 Months Fair Value	$ 995
Less Than 12 Months Unrecognized Loss	(5)
12 Months or More Fair Value
12 Months or More Unrecognized Loss
Total Fair Value	995
Total Unrecognized Loss	(5)
Less Than 12 Months Fair Value	995
Less Than 12 Months Unrecognized Loss	(5)
12 Months or More Fair Value
12 Months or More Unrecognized Loss
Total Fair Value	995
Total Unrecognized Loss	$ (5)

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Note 4 - Loans and Allowance for Loan Losses (Details Textual)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Residential Portfolio Segment [Member]
Real Estate Acquired Through Foreclosure	$ 818,000		$ 818,000		$ 1,131,000
Mortgage Loans in Process of Foreclosure, Amount	1,099,000		$ 1,099,000		988,000
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Financing Receivable, Modifications, Number of Contracts			2
Impaired Financing Receivable, Related Allowance	$ 104,000		$ 104,000		107,000
Specific Reserves [Member]
Allowance for Loan and Lease Losses, Write-offs					$ 1,304,000
Troubled Debt Restructurings [Member]
Increase (Decrease) in Other Loans			$ 725,000
Change In Troubled Debt Restructurings			4.50%
Percentage of Loan Portfolio	83.00%		83.00%		81.00%
Impaired Financing Receivable, Related Allowance	$ 550,000		$ 550,000		$ 1,669,000
Unsecured [Member]
Percentage of Loan Portfolio	5.53%		5.53%		6.06%
Allowance for Loan and Lease Losses, Period Increase (Decrease)	$ (1,167,000)	$ (47,000)	$ (1,119,000)	$ 68,000	$ 93,000
Allowance for Loan and Lease Losses, Write-offs	0	$ 1,304,000	0	$ 1,304,000	1,422,000
Impaired Financing Receivable, Related Allowance	2,630,000		2,630,000		2,164,000
Loans and Leases Receivable, Impaired, Commitment to Lend	864,000		864,000		$ 995,000
Minimum Loan Balance For Loans Evaluated by Risk Categories	$ 500,000		$ 500,000
Financing Receivable, Modifications, Subsequent Default, Number of Contracts			0		0

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Note 4 - Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Residential Portfolio Segment [Member]
Loans	$ 225,731	$ 223,875
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans	70,478	73,458
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans	83,659	72,002
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans	30,099	23,852
Commercial Real Estate Portfolio Segment [Member]
Loans	184,236	169,312
Commercial and Industrial Portfolio Segment [Member]
Loans	83,365	81,936
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans	46,239	44,566
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans	19,712	20,841
Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans	43,653	45,222
Consumer Portfolio Segment [Member]
Loans	109,604	110,629
Loans	602,936	585,752
Less: Allowance for loan losses	6,934	6,648
Loans, net	$ 596,002	$ 579,104

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Note 4 - Allowance for Loan Losses Activity by Portfolio Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Residential Portfolio Segment [Member]
Balance	$ 1,185	$ 1,465	$ 1,087	$ 1,426
Provision for loan losses	(258)	(121)	(218)	(90)
Loans charged off	(67)	(126)	(171)	(223)
Recoveries	46	12	208	117
Balance	906	1,230	906	1,230
Commercial Real Estate Portfolio Segment [Member]
Balance	1,995	4,210	1,959	4,195
Provision for loan losses	1,445	(64)	1,462	(58)
Loans charged off	(52)	(1,366)	(52)	(1,374)
Recoveries	76	15	95	32
Balance	3,464	2,795	3,464	2,795
Commercial and Industrial Portfolio Segment [Member]
Balance	2,672	1,738	2,589	1,602
Provision for loan losses	(1,266)	478	(1,184)	492
Loans charged off		(22)		(24)
Recoveries	10	93	11	217
Balance	1,416	2,287	1,416	2,287
Consumer Portfolio Segment [Member]
Balance	1,094	907	1,013	1,111
Provision for loan losses	220	506	560	377
Loans charged off	(353)	(446)	(836)	(707)
Recoveries	187	165	411	351
Balance	1,148	1,132	1,148	1,132
Balance	6,946	8,320	6,648	8,334
Provision for loan losses	141	799	620	721
Loans charged off	(472)	(1,960)	(1,059)	(2,328)
Recoveries	319	285	725	717
Balance	$ 6,934	$ 7,444	$ 6,934	$ 7,444

XML

Note 4 - Allowance for Loan Losses and the Recorded Investment of Loans Based On Impairment Method (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Residential Portfolio Segment [Member]
Individually evaluated for impairment
Collectively evaluated for impairment	906		1,087
Total ending allowance balance	906	$ 1,185	1,087	$ 1,230	$ 1,465	$ 1,426
Loans individually evaluated for impairment	726		1,001
Loans collectively evaluated for impairment	225,005		222,874
Total ending loans balance	225,731		223,875
Commercial Real Estate Portfolio Segment [Member]
Individually evaluated for impairment	1,893		311
Collectively evaluated for impairment	1,571		1,648
Total ending allowance balance	3,464	1,995	1,959	2,795	4,210	4,195
Loans individually evaluated for impairment	11,914		7,318
Loans collectively evaluated for impairment	172,322		161,994
Total ending loans balance	184,236		169,312
Commercial and Industrial Portfolio Segment [Member]
Individually evaluated for impairment	735		1,850
Collectively evaluated for impairment	681		739
Total ending allowance balance	1,416	2,672	2,589	2,287	1,738	1,602
Loans individually evaluated for impairment	9,329		8,691
Loans collectively evaluated for impairment	74,036		73,245
Total ending loans balance	83,365		81,936
Consumer Portfolio Segment [Member]
Individually evaluated for impairment	2		3
Collectively evaluated for impairment	1,146		1,010
Total ending allowance balance	1,148	1,094	1,013	1,132	907	1,111
Loans individually evaluated for impairment	218		218
Loans collectively evaluated for impairment	109,386		110,411
Total ending loans balance	109,604		110,629
Individually evaluated for impairment	2,630		2,164
Collectively evaluated for impairment	4,304		4,484
Total ending allowance balance	6,934	$ 6,946	6,648	$ 7,444	$ 8,320	$ 8,334
Loans individually evaluated for impairment	22,187		17,228
Loans collectively evaluated for impairment	580,749		568,524
Total ending loans balance	$ 602,936		$ 585,752

XML

Note 4 - Loans Individually Evaluated for Impairment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Unpaid principal balance with allowance	$ 4,936		$ 4,936		$ 204
Recorded investment with allowance	4,936		4,936		204
Allowance for loan losses allocated	1,789		1,789		204
Unpaid principal balance with no allowace	3,691		3,691		3,812
Recorded investment with no allowance	3,144		3,144		3,265
Average impaired loans with allowance	2,570	$ 478	1,781	$ 711
Interest income recognized with allowance	143		147
Cash basis interest recognized with allowance	143		147
Average impaired loans with no allowance	3,197	2,570	3,220	2,573
Interest income recognized with no allowance	40	30	83	60
Cash basis interest recognized with allowance	40	30	83	60
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Unpaid principal balance with allowance	390		390		396
Recorded investment with allowance	390		390		396
Allowance for loan losses allocated	104		104		107
Unpaid principal balance with no allowace	5,659		5,659		5,178
Recorded investment with no allowance	3,262		3,262		2,773
Average impaired loans with allowance	392	3,575	393	3,598
Interest income recognized with allowance	5	49	10	65
Cash basis interest recognized with allowance	5	49	10	65
Average impaired loans with no allowance	3,378	3,630	3,176	3,857
Interest income recognized with no allowance	29	13	42	25
Cash basis interest recognized with allowance	29	13	42	25
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Unpaid principal balance with no allowace	280		280		680
Recorded investment with no allowance	182		182		680
Average impaired loans with no allowance	431	680	514	453
Interest income recognized with no allowance	97		97
Cash basis interest recognized with allowance	97		97
Commercial and Industrial Portfolio Segment [Member]
Unpaid principal balance with allowance	887		887		4,355
Recorded investment with allowance	887		887		4,355
Allowance for loan losses allocated	735		735		1,850
Unpaid principal balance with no allowace					4,336
Recorded investment with no allowance					4,336
Average impaired loans with allowance	887	3,185	887	2,909
Interest income recognized with allowance		40		65
Cash basis interest recognized with allowance		40		65
Average impaired loans with no allowance	8,212	4,249	8,076	4,322
Interest income recognized with no allowance	95	51	187	107
Cash basis interest recognized with allowance	95	51	187	107
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Unpaid principal balance with allowance	218		218		218
Recorded investment with allowance	218		218		218
Allowance for loan losses allocated	2		2		3
Average impaired loans with allowance	218	218	218	219
Interest income recognized with allowance	2	2	4	4
Cash basis interest recognized with allowance	2	2	4	4
Residential Portfolio Segment [Member]
Unpaid principal balance with no allowace	726		726		1,001
Recorded investment with no allowance	726		726		1,001
Average impaired loans with no allowance	728	1,656	730	1,575
Interest income recognized with no allowance	7	16	16	25
Cash basis interest recognized with allowance	7	16	16	25
Commercial and Industrial Portfolio Segment [Member]
Unpaid principal balance with no allowace	8,442		8,442
Recorded investment with no allowance	8,442		8,442
Allowance for loan losses allocated	2,630		2,630		2,164
Unpaid principal balance	25,229		25,229		20,180
Recorded investment	22,187		22,187		$ 17,228
Average impaired loans	20,013	20,241	18,995	20,217
Interest income recognized	418	201	586	351
Cash basis interest recognized	$ 418	$ 201	$ 586	$ 351

XML

Note 4 - Nonaccrual Loans and Loans Past Due 90 Days Or More and Still Accruing (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Residential Portfolio Segment [Member]
Loans past due 90 days and still accruing	$ 142	$ 20
Nonaccrual	2,185	2,048
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans past due 90 days and still accruing	135
Nonaccrual	394	404
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans past due 90 days and still accruing
Nonaccrual	2,402	2,737
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans past due 90 days and still accruing
Nonaccrual	182	769
Commercial and Industrial Portfolio Segment [Member]
Loans past due 90 days and still accruing	75
Nonaccrual	1,200	1,152
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans past due 90 days and still accruing	56	18
Nonaccrual	16	27
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans past due 90 days and still accruing
Nonaccrual	32	96
Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans past due 90 days and still accruing	46	1
Nonaccrual		3
Loans past due 90 days and still accruing	454	39
Nonaccrual	$ 6,411	$ 7,236

XML

Note 4 - Past Due Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivables, 30 to 59 Days Past Due [Member] | Residential Portfolio Segment [Member]
Loans past due	$ 3,477	$ 2,564
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans past due	348	141
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans past due	34	35
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans past due	355
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans past due	115	31
Financing Receivables, 30 to 59 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans past due	789	727
Financing Receivables, 30 to 59 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans past due	74	75
Financing Receivables, 30 to 59 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans past due	568	420
Financing Receivables, 30 to 59 Days Past Due [Member]
Loans past due	5,760	3,993
Financing Receivables, 60 to 89 Days Past Due [Member] | Residential Portfolio Segment [Member]
Loans past due	1,319	1,484
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans past due	1,305	33
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans past due	48	334
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans past due		2
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans past due	25	88
Financing Receivables, 60 to 89 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans past due	152	197
Financing Receivables, 60 to 89 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans past due	70
Financing Receivables, 60 to 89 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans past due	264	104
Financing Receivables, 60 to 89 Days Past Due [Member]
Loans past due	3,183	2,242
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member]
Loans past due	1,742	1,708
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans past due	396	371
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans past due	2,402	2,737
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans past due	182	769
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans past due	1,221	1,077
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans past due	68	36
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans past due	16	76
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans past due	46	4
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans past due	6,073	6,778
Residential Portfolio Segment [Member]
Loans past due	6,538	5,756
Loans, current	219,193	218,119
Loans	225,731	223,875
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans past due	2,049	545
Loans, current	68,429	72,913
Loans	70,478	73,458
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans past due	2,484	3,106
Loans, current	81,175	68,896
Loans	83,659	72,002
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans past due	537	771
Loans, current	29,562	23,081
Loans	30,099	23,852
Commercial Real Estate Portfolio Segment [Member]
Loans	184,236	169,312
Commercial and Industrial Portfolio Segment [Member]
Loans past due	1,361	1,196
Loans, current	82,004	80,740
Loans	83,365	81,936
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans past due	1,009	960
Loans, current	45,230	43,606
Loans	46,239	44,566
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans past due	160	151
Loans, current	19,552	20,690
Loans	19,712	20,841
Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans past due	878	528
Loans, current	42,775	44,694
Loans	43,653	45,222
Consumer Portfolio Segment [Member]
Loans	109,604	110,629
Loans past due	15,016	13,013
Loans, current	587,920	572,739
Loans	$ 602,936	$ 585,752

XML

Note 4 - TDR Loan Modifications (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Performing Financial Instruments [Member] | Residential Portfolio Segment [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring	$ 726	$ 1,001
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		433
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring		300
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Contractual Interest Rate Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring		396
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Reduction of Principal and Interest Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		604
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Extended Maturity [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		1,996
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		204
Performing Financial Instruments [Member] | Commercial and Industrial Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	7,462
Performing Financial Instruments [Member] | Commercial and Industrial Portfolio Segment [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring		7,579
Performing Financial Instruments [Member] | Commercial and Industrial Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	980
Performing Financial Instruments [Member] | Commercial and Industrial Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
Troubled Debt Restructuring		226
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Extended Maturity [Member] | Home Equity Loan [Member]
Troubled Debt Restructuring	218	218
Performing Financial Instruments [Member] | Interest Only Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	389
Performing Financial Instruments [Member] | Interest Only Payments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	539
Performing Financial Instruments [Member] | Contractual Interest Rate Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	390
Performing Financial Instruments [Member] | Reduction of Principal and Interest Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	592
Performing Financial Instruments [Member] | Extended Maturity [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	1,932
Performing Financial Instruments [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	204
Performing Financial Instruments [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	575
Performing Financial Instruments [Member]
Troubled Debt Restructuring	14,007	12,957
Nonperforming Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring		2,473
Nonperforming Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Contractual Interest Rate Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		232
Nonperforming Financial Instruments [Member] | Commercial and Industrial Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	391
Nonperforming Financial Instruments [Member] | Commercial and Industrial Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
Troubled Debt Restructuring		391
Nonperforming Financial Instruments [Member] | Interest Only Payments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	2,148
Nonperforming Financial Instruments [Member] | Contractual Interest Rate Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	232
Nonperforming Financial Instruments [Member]
Troubled Debt Restructuring	2,771	3,096
Residential Portfolio Segment [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring	726	1,001
Commercial Real Estate Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		433
Commercial Real Estate Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring		2,773
Commercial Real Estate Portfolio Segment [Member] | Contractual Interest Rate Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		232
Commercial Real Estate Portfolio Segment [Member] | Contractual Interest Rate Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring		396
Commercial Real Estate Portfolio Segment [Member] | Reduction of Principal and Interest Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		604
Commercial Real Estate Portfolio Segment [Member] | Extended Maturity [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		1,996
Commercial Real Estate Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		204
Commercial and Industrial Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	7,462
Commercial and Industrial Portfolio Segment [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring		7,579
Commercial and Industrial Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	1,371
Commercial and Industrial Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
Troubled Debt Restructuring		617
Consumer Portfolio Segment [Member] | Extended Maturity [Member] | Home Equity Loan [Member]
Troubled Debt Restructuring	218	218
Interest Only Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	389
Interest Only Payments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	2,687
Contractual Interest Rate Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	232
Contractual Interest Rate Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	390
Reduction of Principal and Interest Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	592
Extended Maturity [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	1,932
Interest Rate Below Market Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	204
Interest Rate Below Market Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	575
Troubled Debt Restructuring	$ 16,778	$ 16,053

XML

Note 4 - TDRs Pre-Modification and Post-Modification (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Performing Financial Instruments [Member] | Residential Portfolio Segment [Member] | Interest Only Payments [Member]
TDR’s Performing to Modified Terms Pre- Modification Recorded Investment	$ 495		$ 495
TDR’s Performing to Modified Terms Post- Modification Recorded Investment	495		495
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Only Payments [Member]
TDR’s Performing to Modified Terms Pre- Modification Recorded Investment		$ 238
TDR’s Performing to Modified Terms Post- Modification Recorded Investment		238
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
TDR’s Performing to Modified Terms Pre- Modification Recorded Investment		575
TDR’s Performing to Modified Terms Post- Modification Recorded Investment		575
Performing Financial Instruments [Member]
TDR’s Performing to Modified Terms Pre- Modification Recorded Investment	495	813	495
TDR’s Performing to Modified Terms Post- Modification Recorded Investment	495	$ 813	$ 495
Nonperforming Financial Instruments [Member] | Residential Portfolio Segment [Member] | Interest Only Payments [Member]
TDR’s Performing to Modified Terms Pre- Modification Recorded Investment
TDR’s Performing to Modified Terms Post- Modification Recorded Investment
Nonperforming Financial Instruments [Member]
TDR’s Performing to Modified Terms Pre- Modification Recorded Investment
TDR’s Performing to Modified Terms Post- Modification Recorded Investment

XML

Note 4 - Risk Category of Commercial Loans by Class of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans receivable	$ 61,875	$ 62,287
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans receivable	74,319	61,577
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	29,554	23,080
Pass [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans receivable	79,906	70,852
Pass [Member] | Commercial Portfolio Segment [Member]
Loans receivable	245,654	217,796
Criticized [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans receivable	369	6,738
Criticized [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans receivable	1,717	6,305
Criticized [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable
Criticized [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans receivable		5,232
Criticized [Member] | Commercial Portfolio Segment [Member]
Loans receivable	2,086	18,275
Classified [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans receivable	8,234	4,433
Classified [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans receivable	7,623	4,120
Classified [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	545	772
Classified [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans receivable	3,459	5,852
Classified [Member] | Commercial Portfolio Segment [Member]
Loans receivable	19,861	15,177
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans receivable	70,478	73,458
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans receivable	83,659	72,002
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	30,099	23,852
Commercial Real Estate Portfolio Segment [Member]
Loans receivable	184,236	169,312
Commercial and Industrial Portfolio Segment [Member]
Loans receivable	83,365	81,936
Commercial Portfolio Segment [Member]
Loans receivable	267,601	251,248
Loans receivable	$ 602,936	$ 585,752

XML

Note 4 - Recorded Investment of Residential and Consumer Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans receivable	$ 46,167	$ 44,521
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans receivable	19,680	20,745
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans receivable	43,607	45,218
Performing Financial Instruments [Member] | Residential Portfolio Segment [Member]
Loans receivable	223,404	221,807
Performing Financial Instruments [Member] | Consumer and Residential Portfolio Segment [Member]
Loans receivable	332,858	332,291
Nonperforming Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans receivable	72	45
Nonperforming Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans receivable	32	96
Nonperforming Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans receivable	46	4
Nonperforming Financial Instruments [Member] | Residential Portfolio Segment [Member]
Loans receivable	2,327	2,068
Nonperforming Financial Instruments [Member] | Consumer and Residential Portfolio Segment [Member]
Loans receivable	2,477	2,213
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans receivable	46,239	44,566
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans receivable	19,712	20,841
Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans receivable	43,653	45,222
Consumer Portfolio Segment [Member]
Loans receivable	109,604	110,629
Residential Portfolio Segment [Member]
Loans receivable	225,731	223,875
Consumer and Residential Portfolio Segment [Member]
Loans receivable	335,335	334,504
Loans receivable	$ 602,936	$ 585,752

XML

Note 5 - Financial Instruments with Off-balance Sheet (Details Textual) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure	$ 66,322	$ 62,415

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Note 6 - Other Borrowed Funds (Details Textual) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Federal Home Loan Bank Advances [Member]
Capital Lease Obligations	$ 95,000	$ 117,000
Residential Mortgage [Member]
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged	217,358,000
Commercial Loan [Member]
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged	79,674,000
FHLB Stock [Member]
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged	$ 5,081,000
Minimum [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Interest Rate	1.34%
Debt Instrument, Interest Rate, Stated Percentage	1.25%
Maximum [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Interest Rate	3.31%
Debt Instrument, Interest Rate, Stated Percentage	1.50%
Weighted Average [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Interest Rate	2.09%
FHLB Line of Credit [Member]
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	$ 75,000,000
Federal Home Loan Bank, Advances, General Debt Obligations, Amount of Available, Unused Funds	75,000,000
Letters of Credit Outstanding, Amount	38,800,000	$ 34,800,000
Federal Home Loan Bank, Advances, Maturities Summary, Floating Rate	0
Federal Home Loan Bank, Advances, Maturities Summary, Fixed Rate	27,398,000
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	180,606,000
Federal Home Loan Bank, Advances, General Debt Obligations, Amount of Available, Unused Funds	114,409,000
Federal Home Loan Bank, Advances, Maturities Summary, Due in Next Twelve Months	$ 75,000,000
Debt, Weighted Average Interest Rate	1.44%	1.38%
Notes Payable, Related Parties	$ 360,000

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Note 6 - Other Borrowed Funds (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Federal Home Loan Bank Advances [Member]
Other borrowed funds	$ 27,493	$ 20,028
Promissory Notes [Member]
Other borrowed funds	3,918	3,918
Other borrowed funds	$ 31,411	$ 23,946

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Note 6 - Scheduled Principal Payments (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Federal Home Loan Bank Advances [Member]
2016	$ 1,331
2017	5,022
2018	1,967
2019	1,906
2020	1,817
Thereafter	15,450
	27,493	$ 20,028
Promissory Notes [Member]
2016	1,904
2017	1,502
2018	512
	3,918	3,918
2016	3,235
2017	6,524
2018	2,479
2019	1,906
2020	1,817
Thereafter	15,450
	$ 31,411	$ 23,946

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Note 7 - Segment Information (Details Textual)	3 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Banking [Member]
Concentration Risk, Percentage	89.10%	88.90%

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Note 7 - Segment Reporting (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Banking [Member]
Net interest income	$ 7,617	$ 7,502	$ 15,288	$ 15,063
Provision expense	130	850	505	675
Noninterest income	1,734	1,786	4,566	4,829
Noninterest expense	7,099	6,866	14,293	13,573
Tax expense	438	256	1,169	1,363
Net income	1,684	1,316	3,887	4,281
Assets	814,176	787,363	814,176	787,363
Consumer Finance [Member]
Net interest income	589	647	2,018	2,016
Provision expense	11	(51)	115	46
Noninterest income	127	131	530	577
Noninterest expense	674	688	1,449	1,408
Tax expense	9	47	333	386
Net income	22	94	651	753
Assets	12,273	13,010	12,273	13,010
Net interest income	8,206	8,149	17,306	17,079
Provision expense	141	799	620	721
Noninterest income	1,861	1,917	5,096	5,406
Noninterest expense	7,773	7,554	15,742	14,981
Tax expense	447	303	1,502	1,749
Net income	1,706	1,410	4,538	5,034
Assets	$ 826,449	$ 800,373	$ 826,449	$ 800,373	$ 796,285

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Note 8 - Mergers and Acquisitions (Details Textual) - USD ($)	Aug. 05, 2016	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Milton Bancorp, Inc [Member] | Subsequent Event [Member]
Business Combination, Number of Common Shares of the Acquiring Entity into Which Common Shares of the Acquired Entity May Be Converted	1,636
Business Acquisition, Cash Which May Be Paid for the Stock of Acquired Entity	$ 37,219,000
Business Combination, Exchange of Acquired Entity's Common Shares for Cash or Common Shares of Acquiring Entity, Common Shares Reallocation Percentage	80.00%
Business Acquisition, Number of Issued and Outstanding Common Shares of Acquired Entity	400
Business Combination, Exchange of Acquired Entity's Common Shares for Cash or Common Shares of Acquiring Entity, Cash Reallocation Percentage	20.00%
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	523,518
Payments to Acquire Businesses, Portion Financed in Borrowed Funds	$ 5,000,000
Business Combination, Loans Receivable Assumed	113,320,000
Business Combination, Deposits Assumed	119,219,000
Business Combination, Loans Payable Assumed	0
Subsequent Event [Member]
Assets	$ 950,000,000
Number of Branches	19
Assets		$ 826,449,000	$ 796,285,000	$ 800,373,000